Case 9.2 - Baseball Card Emporium, Baseball Card Emporium (BBE)

Answer the question below when the case information provided.

1. Based on the data provided in Case 9.2, calculate the total cost EOQ BBE ($). 

2. Based on the data provided in Case 9.2, calculate the EOQ BBE (in pounds). 

3. What is the total cost of using motor transportation?

Case  9.2. Baseball Card Emporium

Baseball Card Emporium (BBE) of Lewistown, Pennsylvania, is a distributor of baseball cards to sports card retailers. Its market area encompasses most of Pennsylvania, eastern Ohio, and New Jersey. The cards are printed in Neenah, Wisconsin, and currently shipped to Lewistown via motor carrier transportation. Kenny Craig, vice president of logistics, has asked his staff to evaluate using air carrier service to ship the cards.

Nick Gingher, director of distribution, has collected the following information:

1. Annual demand: 6,000 cases of cards

1. Case value (price): $96 each

1. Inventory carrying cost (annual): 30%

1. Cost per order to replenish inventory: $75

1. In-transit inventory carrying cost: 18%

1. Transit time using motor carrier (parcel ground): 4 days

1. Cycle time using motor carrier (parcel ground): 7 days

1. Transit time using air carrier: 1 day

1. Cycle time using air carrier:2 days

1. Motor carrier rate: $1.20 per cwt. (100 lbs.)

1. Air carrier rate: $2.50 per cwt.

1. Unit weight: 50 lbs. per case