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A company is the logistics vendor for B Company. B has daily shipments of a power-steering pump from its Ohio plant to an auto assembly line in Alabama. The value of the standard shipment is 250,000. A has two options. 1. Its standard 2-day shipment. 2. a subcontractor who will team drive overnight with an effective delivery of 1 day. The extra driver costs 175. B's holding cost is 35% annually for this kind of inventory

Please explain in detail.

Question
1. which option is more economical
2. what production issues are not included in the data presented?

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M9607127

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