Assume inventory in transit holding cost is 40 of the, Operation Management

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Assume inventory in transit holding cost is 40 of the

ABC Co. is procuring $600000 worth of materials from a vndor in Canada. The following table gives details of transportation cost for the two options:

	Option1	Option 2
	(By Sea)	(By road)
Freight Cost	$40,000	$30,000
Delivery Time(days)	25	15

Assume inventory in transit holding cost is 40% of the shipment value per year.

Assume 365 days per year. Which option would you recommend and why.

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