Question

LM.97 Each week the ABC Company, from Albuquerque, NM receives 57 separate LTL shipments from a number of different suppliers in the Dallas, TX area. Each parcel shipment from Dallas to Albuquerque costs $140. Alternate Shipping Method A Dallas-based 3PL provider has approached ABC Company with a proposal to run a consolidation operation where they would pick up the supplier shipments each week and load them on to one truck for shipment to Albuquerque. The relative data for this alternative shipping method are as follows: Local pickup fee = $39 pickup fee • Average weight per supplier shipment = 130 lbs. • Local consolidation fee = $53 per hundred-weight • Consolidated TL shipment from Dallas to Albuquerque = $815 What is the total cost of shipping the separate parcel shipments from the Dallas-area suppliers to the ABC company location in Albuquerque? (Display your answer as a whole number.) 7980 How much money would ABC Company save to hire the 3PL to pickup the shipments from each supplier and consolidate them into one bulk shipment to Albuquerque? (Display your answer as a whole number.) 4781 At what number of shipments is the cost the same for the two options? (Display your answer as a whole number.) 3199

Answer 1

Option 1: LTL

Number of LTL shipments = 57

LTL Shipment cost of each parcel = $ 140

Option 2: TL

Local pickup fee = $ 39

Average weight per shipment = 130 lbs

Total weight of consolidated shipment = 130*57/100 = 74.1 cwt (x100 lbs)

Local consolidation fee = $ 53 per cwt

Consolidated TL shipment charge from Dallas to Albuquerque = $ 815

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1)

Total cost of shipping the separate parcel shipments = Number of shipments * Shipment fee per parcel

= 57*140

= $ 7,980

ANSWER: 7980

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2)

Total cost of consolidated shipment = local pickup fee * Number of shipments + Total weight of consolidated shipment * local consolidation fee + TL shipment fee

= 39*57+74.1*53+815

= $ 6,965 (rounded to whole number)

Savings by consolidation = 7980 - 6965

= $ 1,015

ANSWER: 1015

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3)

Let x be the number of shipments, at which total cost is the same for both options

140*x = 39*x+130*x*53/100+815

or, 140x = 107.9x + 815

or, 32.1x = 815

or, x = 815/32.1 = 25.4 ~ 25  (rounded-off)

ANSWER: 25

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