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Suppose two truck services are being considered for deliveries from a company plant to one of its warehouses. Service B is less expensive but slower

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Suppose two truck services are being considered for deliveries from a company plant to one of its warehouses. Service B is less expensive but slower and less reliable than service A. The following information has been assembled. Demand (known) Order cost Product price, f.o.b. source Shipping quantity In-transit inventory carrying cost Inventory carrying cost Desired in-stock probability during lead time Selling days 9,600 cwt. / year $100/order $50/cwt. As per EOQ 25%/year 30%/year 90 % 365 days per year Service Service Transit time (LT) Variability in LT (S.) 4 days 6 days 1.5 days 3 days $12.00 /cwt. $11.80/cwt. Rate A reorder point inventory control method is used at the warehouse. From the point of view of the inventory in the warehouse, which truck service should be selected

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