Which mode of transport should the company choose

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Reference no: EM133648145

Question: A company is examining two choices for moving its goods from the plant to its depots in eastern India: Truck and Rail. The relevant information is as follows: Transport lead time is 4 and 12 for Truck and Rail respectively. Transportation charges are Rs 30 and Rs 20. Shipment sizes in units are 500 and 5000 in both options. The company is planning to ship 20,000 units per year. The cost of the product is Rs 500 per unit. Assume the inventory holding/carrying cost is 20%.

(a) Which mode of transport should the company choose?

(b) Will your answer change if you realize that time will follow a normal distribution with a S D of 4 days.

Reference no: EM133648145

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