Operations Management: Processes and Supply Chains, 12th Edition

Solved Problem 2

Kayco Stamping in Ft. Worth, Texas, ships sheet metal components to a switch box assembly plant in Waterford, Virginia. Each component weighs approximately 25 pounds, and 50 components fit on a standard pallet. A complete pallet ships as freight class classification 92.5. Use Table 15.2 to calculate the shipment cost for the following demand quantities and calculate the shipping cost per component.

1. 3 pallets

2. 13 pallets

Solution

1. At 3 pallets, or 150 pieces, the shipping $\text{weight}=150\times \left(25\text{ pounds}\right)=3,750\text{ pounds}.$

   At a freight classification of 92.5, using Table 15.2, the break-even $\text{weight}=50\left(28.64\right)/37.56$$=38.13$ or 3,813 pounds, thus the shipment does not qualify for the lower rate.

   Total shipping $\text{cost}=37.5\left(37.56\right)=\text{\$}1,\mathrm{408.50.}$