The manager of the Monat Company has just received a new offer from a trucking company for the shipment of fractional horsepower motors to the companys field warehouse. Currently, a rate of $3 per cwt is used for the delivery size of 40,000 pounds (per delivery), and the lead time is 4 days. The new proposal is a rate of $2.5 per cwt for the delivery size of 45,000 pounds (per delivery), and the new lead time is 5 days. By doing this, the trucking company can gain some efficiency/benefit in its operation (for example, achieve full truckload or more flexibility in operations), and the trucking company is also willing to pass part of the benefit to Monat by charging a cheaper rate (reducing from $3 per cwt to $2.5 per cwt).

Here is the information provided by Monat:

The annual demand on the warehouse is 5,000 motors per year, and let us assume constant demand rate on the warehouse (in other words, no random demand)

Weight of each motor is 175 lbs per motor

The standard cost of motor in warehouse $200 per motor

Stock replenishment order handling costs is $15 per order

Both the in-transit carrying cost and the warehouse inventory carrying costs as a percentage of average value is 25% per year

We assume the lead times are constant and there are no variations

1. What is the Total order handling costs for both the current plan and new Proposal?
2. What is the Total transportation costs for both the current plan and the new Proposal?
3. What is the Total warehouse inventory holding costs for both plans?
4. What is the Total in-transit inventory carrying costs for both plans?
5. What is the Total costs combining all relevant costs for both plans