Identify the correct answer for each of the following questions about the inventory carrying costs that

are created by the mode used by the shipper. This quiz is open book and notes, but is timed.

You ship cases of canned corn from the canning plant to the distribution center for a large grocery

chain. The corn is shipped by railcar, which holds 4000 cases. It takes six days for the railroad to

deliver the corn. Each case is valued at $14 at the canning plant and $18 at the grocery DC. The

grocery DC reports that their yearly demand is 600 cases a day, or 216,000 cases a year of corn. It

has been determined that the inventory carrying cost is 35% at the grocery DC and 15% when the

shipment is moving in the railcar.

2. What is the annual in-transit inventory carrying cost for the stock moving in the railcars?