ABC Co. is procuring $600000 worth of materials from a vndor in Canada. The following table gives details of transportation cost for the two options:
|
|
Option1
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Option 2
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|
|
(By Sea)
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(By road)
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|
Freight Cost
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$40,000
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$30,000
|
|
Delivery Time(days)
|
25
|
15
|
Assume inventory in transit holding cost is 40% of the shipment value per year.
Assume 365 days per year. Which option would you recommend and why.