Answered: A French car company ships 120,000 cars…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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A French car company ships 120,000 cars annually to the United Kingdom. The current method of shipment uses ferries to cross
the English Channel and averages 10 days. The firm is considering shipping by rail through the Chunnel (the tunnel that goes
through the English Channel) instead. That transport method would average approximately 2 days. Shipping through the Chunnel
costs $80 more per vehicle. The firm has a holding cost of 25% per year. The average value of each car shipped is $20,000. Which
transportation method should be selected?

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