Transportation in Supply Chain

| June 9, 2016

Question
A power plant in California uses coal at the rate of 100,000 pounds each day. It also uses MRO material at the rate of 1,000 pounds each day. The coal comes from Wyoming and MRO material comes from Chicago. Coal cost $0.01 per pound, whereas MRO material cost $10 per pound, on average. Holding cost at the power plant are 25 percent. Transportation choices avialable are as follows:TrainLead time = 15 daysCarload (100,000 pounds) at $400 per carloadFull train (70 cars) at $15,000 per train
TruckLead time = 4 daysMinimum cost = 100Up to 10,000 pounds at $0.08 per poundBetween 10,000 and 20,000 pounds at $0.07 per poundBetween 25,000 and 40,000 pounds at $0.06 per poundSmall TL (40,000 pounds) for 2,000Large TL (60,000 pounds) for 2,600

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