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UAC Footwear is an international supplier of outdoor footwear for adventurous families.​ Currently, the company uses...

UAC Footwear is an international supplier of outdoor footwear for adventurous families.​ Currently, the company uses a logistical provider to provide warehouse services and handle packages destined for ground delivery. The contract calls for $900,000 in annual fixed​ charges, which covers the​ provider's overhead and warehouse​ costs, and variable costs of $12.00 per package shipped.​ Recently, UAC Footwear found a warehouse it could lease at a cost of $2,000,000 per​ year, which includes lease​ costs, labor, and management oversight.​ Furthermore, the company found another provider who would deliver packages from the warehouse for $10.00 per package. Considering only​ costs, how many packages must UAC Footware ship to make the vertical integration into warehouse operations​ beneficial?

How many packages must UAC Footwear ship to make the vertical integration into warehouse operations​ beneficial? Show your work for credit.​

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Let the number of package shipped by UAC footwear to make warehouse operations viable is X.

then for getting to same cost structure:

900000+12*X= 2000000+10*X, solving for X,

X=550000

thus UAC needs to ship 550000 parcels or more.

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