The Smoked Salmon, a seafood supplier in Egypt, has a new yearly contract to supply fresh seafood products to Saudi Arabia. The value of the contract is E£800,000 (Egyptian Pound)

and the estimated holding cost is 20% annually. The Smoked Salmon is evaluating two possible transportation modes: sea and air freight. Maritime transportation will take 2 days, while air freight will only take 1 day at an extra cost of E£500.

a) Which option is more economical?

b) What other issues should be considered when selecting the mode of transportation? lop6