Question

When Vidalia onions are ready, the entire 13 county (plus parts of seven other counties) area in Georgia where they are grown is devoted to the harvest, packaging and shipping of this delicacy. The Onion Shack currently purchases 120,000 bags of onions each year at a price of $100 per bag (a bag is ten pounds). Onion Shack has historically purchased in lots of 3000 bags. Transit time and capacity vary as indicated in the table. The safety inventory that Onion Shack requires is 30% of lead time demand and the holding cost for a bag is 15% of cost.

Quantity Quantity shipped Shipping cost Transit time
Carrier Shipped (cwt) (bags) ($/cwt) (days)
Mashburn Rail 200+ 2000+ $2.10 5
Sylvia Express 100+ 1000+ $2.35 3
Anita Enterprises 250+ 2500+ $1.35 3
Smith Trucking 250+ 2500+ $1.00 3

Use Scenario 14.1 to determine the transportation cost of the Anita Enterprises option if the Onion Shack purchases 240,000 bags of Vidalia onions each year.
A) $156,000
B) $144,000
C) $162,000
D) $150,000

Answer 1

The actual transportation cost for purchasing 240,000 bags from Anita Enterprises is calculated to be $32,400, which does not match any of the provided answers. There may be an error in the question or the provided answer choices, as the calculated cost is based on the weight in cwt multiplied by the cost per cwt.

Step-by-step explanation:

The question involves calculating the transportation cost for the Onion Shack if they choose to purchase Vidalia onions using Anita Enterprises. Given that Onion Shack purchases 240,000 bags per year, we must first determine the cost per hundredweight (cwt) and then multiply it by the number of hundredweights shipped. With Anita Enterprises' shipping cost at $1.35 per cwt and each bag weighing 10 pounds (or 0.1 cwt), the cost can be calculated for the entire quantity of onions.

First, we calculate the total weight of 240,000 bags in hundredweights: 240,000 bags * 0.1 cwt/bag = 24,000 cwt.

Next, we determine the total transportation cost: 24,000 cwt * $1.35/cwt = $32,400.

However, none of the provided answer options (A) $156,000, (B) $144,000, (C) $162,000, (D) $150,000 match the calculated amount of $32,400. This might indicate a potential misinterpretation of the question or an error in the provided answer choices.