Monczka-Trent Shipping is the logistics vendor for Handfield Manufacturing Co, in Ohio. Handfield has daily shipments of a power-steering pump from its Ohio plant to an auto assembly line in Alabama. The value of the standard shipment is $250,000. Monczka-Trent has two options:
(1) its standard 2-day shipment or
(2) a subcontractor who will team drive overnight with an effective delivery of 1 day. The extra driver costs $175. Handfields's holding cost is 35% annually for this kind of inventory.
a) Which option is most economical?
b.) What production issues are not included in the data presented above?