Introduction to Materials Management 8th Edition by Steve Chapman ,Tony Arnold ,Ann Gatewood ,Lloyd Clive

Exercise 7

A company in Calgary serves a market in the northwestern United States. Now it ships LTL at an average cost of $30 per unit. If the company establishes a distribution center in the market, it estimates the TL cost will be $15 per unit, inventory-carrying costs will be $7 per unit, and the local LTL cost will average $6 per unit. If the company forecasts annual demand at 200,000 units, how much will they save annually?