Q. Baseball Card Emporium (BBE) of Lewistown, Pennsylvania, is a distributer or of baseball cards to sports card retailers. Its market area encompasses most of Pennsylvania, eastern Ohio also New Jersey. The cards are printed in Neenah, Wisconsin also presently shipped
to Lewistown via motor carrier transportation. Kenny Craig, vice president of logistics, has asked his staff to Estimate using air carrier service to ship the cards. Nick Gingher, director of distribution, has collected the subsequent information:

•Annual demand: 5,000 cases of cards

•Case value (price): $200 every

•Inventory carrying cost (annual): 28%

•Cost per order to replenish inventory: $100

•In-transit inventory carrying cost: 18%

•Transit time using motor carrier: 5 days

•Transit time using air carrier: 2 days

•Motor carrier rate: $0.80 per cwt. (100 lbs.)

•Air carrier rate: $1.50 per cwt.

•Unit weight: 50 lbs. per case

CASE QUESTIONS

1.Elucidate what is the economic order quantity for BBE in units? In pounds?

2. Elucidate what is the total cost (not considering transportation-related costs) of the EOQ?

3. Elucidate what is the total cost for using motor carrier transportation?

4. Elucidate what is the total cost for using air carrier transportation?

5. Which alternative should BBE use?