Richard’s Sporting Goods needs to fill an online order for 174 hockey sticks. The manager is considering shipping the order by truck to the customer in Wisconsin, at a carrier charge of $75. The delivery will take five days and the order is paid on delivery (Richard’s doesn’t get paid until the sticks are received). The hockey sticks are valued at $55 for each stick and Richard’s uses a 25 percent annual inventory carrying charge.
a. What will be the total shipping and transit inventory cost of the shipment? (Use 365 days in a year. Do not round intermediate calculations. Round your answers to 2 decimal places.)
Transit Inventory Cost
Total Cost
b-1. If the shipment could be delivered in only 2 days at a cost of $100, then what will be the total shipment cost? (Use 365 days in a year. Do not round intermediate calculations. Round your answer to 2 decimal places.)
b-2. If the manager chose the above option, how much money would be saved or lost? (Round your answer to 2 decimal places.)