Reference no: EM132954708

A brick maker (BM) in Alberta mixes dry ink into its bricks to make them brown. BM"s demand for dry ink is 60 tons per year. Currently. BM buys the dry iolk from an impon merchant that buys the ink from an East Coast U.S. manufucrurer. The shipments arrive in lot size of 30 tons by rail. The current cost or dry ink is C$612.22 per ton, including rail transportation cost to BM's location. BM currently keeps 6 tons of dry ink a~ safety stock. BM's buyer has asked the import merchant to quote a price for truck deliveries in smaller lot sizes. The merchant ha~ quoted C$567.78 per ton fora lot size of20 tons. In the meantime. BM"s buyer bas contacted the manufocrurer directly and asked if BM could purchase dry ink diroctly from the manufocturer. The answer was affonnati"C and the cost woold be US$386.89 perton (assume USSI = C$1.05). A common carrier has quoted a price of CS2,600 to haul a full truckload of dry ink (20 tons) from the manufacturer to BM's location in Alberta. The trip will take seven days. The holding cost rate for BM is 20 peroent of unit cost per year. R>r truck deliveries, BM will hold only 2 tons of safety stocks. Assume 365 days per year. Which alternative has the lowest total annual purchase, transport, in-transit, safety stock. and average cyele stock holding cost? (Hinr: The value of dry ink in Albena for calculating the safety stock and cycle stock holding cost of truck deli "Cries should include the freight cost.)