Your options for shipping $100,000 of machine parts from Baltimore to Kuala Lumpur, Malaysia, are (1) use a ship that will take 30 days at a cost of $3,800, or (2) truck the parts to Los Angeles and then ship at a total cost of $4,800. The second option will take only 20 days. You are paid via a letter of credit the day the parts arrive. Your holding cost is estimated at 30% of the value per year.
A) What option is more economical?
B) What customer issues are not included in the data presented?
(c) If you had a third option that costs only $4000 and also takes 20 days, what is your most economical plan?