Final answer:
The recommended shipping alternative is the nine-day rate offered by Shipper A, with a total cost of $157,680 for shipping 360 boxes.
Step-by-step explanation:
The manager must choose between two shippers, A and B, and select the most cost-effective option for shipping 360 boxes. Shipper A offers a two-day rate of $514, a three-day rate of $472, and a nine-day rate of $407. Shipper B offers a four-day rate of $458 and a seven-day rate of $424. To determine the most cost-effective option, we need to consider both the shipping rates and the annual holding costs.
To calculate the total cost for each shipping alternative, we multiply the shipping rate by the number of boxes and add the annual holding costs, which is 31% of the box price of $146.
For Shipper A, the total cost for each shipping option is:
- Two-day rate: $514 × 360 + (0.31 × $146 × 360) = $192,480
- Three-day rate: $472 × 360 + (0.31 × $146 × 360) = $182,880
- Nine-day rate: $407 × 360 + (0.31 × $146 × 360) = $157,680
For Shipper B, the total cost for each shipping option is:
- Four-day rate: $458 × 360 + (0.31 × $146 × 360) = $177,120
- Seven-day rate: $424 × 360 + (0.31 × $146 × 360) = $160,560
Based on the calculations, the most cost-effective shipping alternative is the nine-day rate offered by Shipper A, with a total cost of $157,680.