A company manufactures component parts for machine tools in North America and ships them to Southeast Asia for assembly and sale in the local market. The components are shipped by sea, transit time averages six weeks, and the shipping costs $1000 per shipment. The company is considering moving the parts by air at an estimated cost of

$7500; the shipment taking two days to get there. If inventory in transit for the shipment costs $150 per day, should they ship by air?

In Chapter 8, it was said that forecasts are more accurate for nearer periods of time.

Should this be considered? What activities are affected by the shorter lead time? LO.1