Tsaltz Inc. of Hamilton, Ontario, is a distributor of star wars themed dog tags to pet store retailers. Its market area spans most of Ontario. The dog tags are made in Calgary, Alberta, and are currently shipped to Ontario via motor carrier transportation. Easton, Director of Logistics, has asked his staff to evaluate using Rail car carrier service to ship the dog tags. He obtained the following data for you to make your recommendation which carrier is best for the company.

Data:

R= Annual rate of demand 5000 cases

V= Value of cost of 1 unit of inventory $ 48.00 per case

W= Carrying cost per dollar value of inventory per year 15% inventory carrying cost

A= Cost of placing an order $ 37.50 cost per order

In-transit inventory carry cost 9%

Transit time using motor carrier (parcel ground) 2 days

Transit time using Rail car carrier 1 days

Motor carrier rate $ 0.66 per cwt (100 lbs)

Rail car carrier rate $1.25 per cwt (100 lbs)

Unit weight 25 pounds

EOQ units 228.00 units

EOQ pounds 5700 pounds

EOQ cwt (hundredweight) 57.00 cwt

Order cycle 17 day cycle time

Total Annual Cost including motor carrier transit time (excludes freight cost) $1,759.05

What is the total cost for using motor carrier transportation including freight costs?

EOQ=SQRT(2RA/VW)

TAC=1/2QVW+R/Q(A)

Order cycle time=(R/Q)/365

Note: (Round to 0 decimal points and no dollar sign)