solution

1.A manufacturer in Nebraska ships finished products to the ocean port in San Diego, California. New loading facilities will be needed to accommodate the expected growth in sales for their new product. In 2018, the company shipped 4 million pounds of product through several areas in San Diego. The logistic Costs in 2018 are given in the table. Due to growth in emerging markets, the company expects a growth rate of 8% per year through this port for the next five years.(Show all steps, submission with results only will not gain any credit! If you don’t know how to type your answer, you can take a picture of your handwriting and paste it in the answer section.)

Rail Truck

Transportation Variable Cost. $250,000 $275,000

Inventory Costs

Carrying $45,000 $27,000

Handling $35,000 $43,000

Ordering $15,000 $17,000

Fixed Cost $160,000 $130,000

TOTAL COST $505,000 $492,000

1. What is the total variable cost of the Rail shipping method?

2. What is the total variable cost per pound of the Rail shipping method? (Round the answer to 4 decimal places)

3. What is the total cost of shipping 5 million pounds of products via the Rail shipping method? (Note: Round the variable cost per pound to 4 decimal places)

4. At what level of demand per year would these two transportation methods be equal in terms of total costs? (Round the answer to 2 decimal places) (Note: Round the variable cost per pound to 4 decimal places)