Working Cost Problems

Description
A spreadsheet showing the workings of few problems based on overall cost

Coal
Demand Annual demand Cost/pound Holding cost Annual Holding cost No of days/year Safety Stock(train) Safety Stock(truck) 100000 pounds 36500000 pounds 0.01 $ 25% 0.0025 365 3000000 800000

Mode of transport Train Carload Full train Truck Minimum cost Variable cost

Alternatives Train CarLoad Full train Truck Truck Truck Truck Truck Truck Truck Small truck Large truck

Lot size 100000 7000000 9000 10000 15000 20000 25000 30000 35000 40000 60000

Transportation cost $146,000.00 $78,214.29 $3,325,555.56 $2,920,000.00 $2,798,333.33 $2,737,500.00 $2,336,000.00 $2,311,666.67 $2,294,285.71 $1,825,000.00 $1,581,666.67

Cycleinventory 50000 3500000 4500 5000 7500 10000 12500 15000 17500 20000 30000

Safety Inventory 3000000 3000000 800000 800000 800000 800000 800000 800000 800000 800000 800000

Thus we can see that the minimum overall cost is achieved when we transport coal by full

range of qty shipped 100000 7000000

shipping cost $400.00 $15,000.00 per car per train Truck Train

Transit time 3 14