Xyz company is rethinking the way it ships to its 58, Ask an Expert

Management Studies

XYZ Company is rethinking the way it ships to its 58 customers in another city 300 miles away.

Current Shipping/Delivery Method

They currently hire an LTL (less-than-truckload) carrier to pick up and deliver these shipments. Each customer order shipped via LTL carrier costs $143.

Alternate Shipping/Delivery Method

A 3PL (third-party logistics provider) has approached XYZ Company and suggested that they make full truckload (TL) shipments from their facility to the 3PL's warehouse in the customers' city. The 3PL would then break the bulk shipment (TL or truckload shipment) into individual customer orders to be shipped locally by an LTL carrier. The relative data for this alternative shipping method are as follows:

Full TL shipment cost (300 miles) = $865

Average order weight = 575 lbs.

Warehouse break-bulk fee (per 100 lbs., a.k.a. per "hundred weight") = $13

Local LTL delivery fee = $45

What is the total cost of delivering to all customers via LTL carrier (current method)?

What is the total cost of shipping to all customers using the alternate shipping/delivery method?

At what cost of breaking bulk per hundred weight would the cost of these two methods be the same?

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M92464728

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