ABC Power Tools is currently making shipments from its plant in New Jersey to a customer location in California. ABC currently uses a mix a motor carriers and rail to move its product to its customer. ABC is contemplating using an all-motor option for this move. Use the following information to answer the questions at the end:
• Price per unit = $1000
• Net cost per unit = $700
• Daily demand = 500 units
• Inventory carrying cost = 30%
• Rail cost = 3% of the price of the product
• Motor carrier cost = 10% of the price of the product
• ABC owns the inventory up to the delivery at the customer’s DC
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