APICS Certified in Planning and Inventory Management (CPIM 8.0) CPIM-8.0 Question # 52 Topic 6 Discussion
CPIM-8.0 Exam Topic 6 Question 52 Discussion:
Question #: 52
Topic #: 6
A logistics manager Is faced with delivering an order via rail or truck. Shipping via rail costs S300 and takes 14 days. Shipping via truck costs $600 and takes 3 days. If the holding cost is $40 per day, what is the cost to deliver the order?
The cost to deliver the order consists of two components: the shipping cost and the holding cost. The shipping cost is the amount paid to the transportation mode for moving the order from the origin to the destination. The holding cost is the amount incurred for storing the order until it is delivered to the customer. The holding cost depends on the delivery time, which is the number of days it takes for the order to reach the customer. The longer the delivery time, the higher the holding cost. The shipping cost and the holding cost for each transportation mode are calculated as follows:
Shipping via rail:
Shipping cost = $300
Delivery time = 14 days
Holding cost = $40 x 14 = $560
Total cost = $300 + $560 = $860
Shipping via truck:
Shipping cost = $600
Delivery time = 3 days
Holding cost = $40 x 3 = $120
Total cost = $600 + $120 = $720
Therefore, the cost to deliver the order via rail is $860, and the cost to deliver the order via truck is $720. References: Transportation Costing | APICS Dictionary Term of the Day, APICS CPIM 8 Planning and Inventory Management | ASCM
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