You manage the shipping of item #ET$607$ from your supplier. The shipments for this item are delivered to the nearest port, and you have to transport them to the distribution center. You have two options, full truck load $($FTL$)$ and less than truck load $($LTL$).$

Your company needs $5000$ units of #ET$607$ per year and it is purchased at a price of $$38$ per unit. Each order costs $$93.$ Your company uses an annual holding charge of $14\mathrm{.}0\%,$ a cycle service level of $90\%$ and $365$ days per year for planning purposes.

The full truck load $($FTL$)$ option costs $$1400$ per load. It takes $5$ days to deliver and each truck can carry up to $1400$ items.

The less than truck $($LTL$)$ load option costs $$2\mathrm{.}6$ per item. It takes $7$ days to deliver.

You have three options,

OPTION A: to use the FTL option and deliver full truck loads,

OPTION B: to use the FTL option and deliver the economic order quantity

OPTION C: to use LTL option and deliver the economic order quantity.

Your company includes the cost of transportation as an item cost unless otherwise specified. This decision impacts all costs such as purchase, ordering and inventory costs. As an example, the cost per item of #ET$607$ in the Full truckload is $$1400/1400$items $+$ $$38/$item $=$ $$39\mathrm{.}0/$item$.$