2. Every week BosssMustang of Oakland, California, receives shipments from 10 different suppliers in the Los Angeles area. Each supplier’s order weighs, on average, 500 lbs. A direct truck shipment from Los Angeles to Oakland costs $800.
A Los Angeles 3PL provider has offered to run a consolidation warehousing operation for BosssMustang. The 3PL provider would pick up the shipments from each supplier, process them, and put them on a single truck bound for Oakland. The pickup fee would be $100 per supplier, and the warehousing cost would be $55 per hundred-weight. The direct truck shipment cost would be the same as before, $800.

a. (*) How much would it cost BosssMustang per week to accept direct, single-order shipments from all of its suppliers? What would the utilization levels for the trucks look like, assuming each truck was capable of carrying 10,000 lbs.?

b. (**) How much would it cost BosssMustang per week to use the consolidation warehousing option? What would the utilization level for the truck look like?

c. (**) Suppose higher gasoline prices have caused the trucking cost to increase to $1200.Which option looks best now?