(1) Noon & Sheen Online shipping company operated at UAE. Since its inception, Noon & Sheen, has relied on third-party shippers, such as UPS and FedEx. In 2016, Noon & Sheen experienced a wave of last-minute orders and bad weather left UPS and other shippers unable to deliver Noon & Sheen packages. Noon & Sheen issued apologies and AED 50 gift cards to customers, but its reputation suffered from the unhappy customers who were without gifts on Eid Day.

Since the 2016 Christmas shipping problems, Noon & Sheen has contracted with alternate shipping services and has rolled out its own trucks in some cities in an effort to decrease its reliance on UPS and FedEx. Shipping costs are a large expense for Noon & Sheen; according to Noon & Sheens third quarter 2016 Form 10-Q, its shipping costs were 17.0% of product sales. The same quarter in 2015 saw shipping costs as 14.5% of product sales, so shipping costs have been increasing. Noon & Sheen has also been experimenting with faster shipping options, such as same-day delivery, two-hour delivery, and even one-hour delivery.

In late 2017, rumors have emerged that Noon & Sheen is experimenting with operating its own air cargo operation based in Dubai.

Questions

a. What costs are relevant when Noon & Sheen is considering whether to start its own cargo freight service?

b. What tools might Noon & Sheen use to analyze the decision to operate its own cargo freight service?