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

Exercise 10

Suppose the company in problem 13.8 had another market area located between the parent plant and the proposed distribution center. The LTL costs from the plant to that market are $35 per cwt. The company estimates that LTL shipments from the distribution center will cost $6 per cwt. Should it supply this market from the distribution center or central supply?
(Reference problem 13.8 )
A company ships LTL to customers in a market in the Midwest at an average cost of $40 per cwt. It proposes establishing a distribution center in this market. TL shipment costs to the DC would be $20 per cwt., the estimated inventory carrying costs are $5 per cwt., and the local cartage (LTL) cost is estimated at $10 per cwt. If the annual shipped volume is 100,000 cwt., what will the annual savings be by establishing the distribution center?