Delta Inc. is looking for a warehouse space to serve as its distribution center. Delta products are packaged in a standard carton that contains 30 units of finished products. Two alternatives are being considered as follows: Alternative A: To purchase and manage its own distribution center. The cost to manage the warehouse is $54,000 per year. Other general operating expenses are priced at $0.0075 per carton. The cost of the warehouse will be $350,000. Alternative B: To use an independent warehouse company who will be responsible for all costs. Delta will pay $0.15 per carton distributed from this warehouse. Assume a study period of 10 years and that the warehouse can be sold for $150,000 at the end of this period.

If delta does business at 10%, which alternative should they select if they expect to produce 500,000 cartons per year. Use annual worth analysis.

What is the minimum number of cartons per year Delta should produce to make Alternative A more profitable than Alternative B?