LIBRO RONALD BALLOU PDF

To know whether domestic or foreign production is least expensive, the total of production and distribution costs must be computed from the source point to the marketplace. Two alternatives are suggested and they can be compared as follows. Producing in Taiwan would appear to be the least expensive. Whether the incentive rate should be implemented depends on the shipment size corresponding to the minimum of the sum of transportation, inven- tory, and order processing costs.

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To know whether domestic or foreign production is least expensive, the total of production and distribution costs must be computed from the source point to the marketplace. Two alternatives are suggested and they can be compared as follows. Producing in Taiwan would appear to be the least expensive. Whether the incentive rate should be implemented depends on the shipment size corresponding to the minimum of the sum of transportation, inven- tory, and order processing costs.

These costs are determined for various shipping quantities that might be selected to cover the range of shipment sizes implied in the problem. Table gives a summary of the costs to Monarch for various shipment sizes. Shipment sizes should be approximately doubled so that the 40, lb. It is important to note that the individual cost elements are not necessarily at a minimum at low shipment sizes, whereas order-processing costs are low at high shipment sizes.

They are in cost conflict with each other. Transportation costs are low at high shipment sizes, but exact costs depend on the minimum volume for which the rate is quoted. In preparation for a broader planning perspective to be considered later in the text, the student might be asked what the place of the supplier is in this decision. How does he affect the decision, and how is he affected by it?

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