A shipment of new connectors for semiconductors needs to go from San Jose to Singapore for assembly.

The value of the connectors is $1,750, and holding cost is 40% per year. One airfreight carrier can ship the connectors 1 day faster than its competitor, at an extra cost of $20.00. Which carrier should be selected?

APPROACH c First we determine the daily holding cost and then compare the daily holding cost with the cost of faster shipment.