Practice Problems | Week 10: Transportation II - Freight Transportation Analysis and Case Study | Supply Chain Fundamentals | edX

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PP1 $ Skiski
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Part 1
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Marion has just been hired by Skiski, a popular ski equipment firm. This company manufactures all its skis in mainland China. Skiski
produces 15,000 pallets of skis per year. Marion's first assignment at the company is to analyze and improve the transportation cost.
She decides to start by looking into the transportation cost from the factory to the port. Marion has collected the following information:
the skis are shipped by truck a distance of 150 miles from the factory to the nearest port. Loading costs are $50 per shipment plus $3
per pallet. Unloading costs are $30 per shipment plus $5 per pallet. Trucking costs $2 per mile and each truck has capacity for 40
pallets. Holding cost is $8000 per pallet per year. Skiski currently has a FTL policy, they ship full truck loads.

Before moving to FTL policy, What is the total fixed cost for the entire year considering optimal order quantity?
Round the value of Q to the nearest integer and use it to calculate the final answer. Please enter the answer rounded to the
nearest integer.

1480000 ! Answer: 150997

1480000

Explanation
Fixed costs = 50 S 30 T $80 per shipment.
There is also a fixed cost of transportation per shipment: $2/mile * 150 miles/shipment = $300 per shipment and a holding cost of
$8,000 per pallet per year.

If Skiski follows an optimal order policy, the quantity shipped is equal to:
𝑄 = √‾2‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾
∗ 𝑆 ∗ (𝐹 𝑖𝑥𝑒𝑑𝑐𝑜𝑠𝑡𝑠) /ℎ‾ = √‾2‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾
∗ 15000 ∗ (50 + 30 + 2 ∗ 150) /8000‾ = 𝑄 = 37.75 = 38 pallets.

Therefore, the total fixed cost for the year considering optimal order quantity will be:

𝑆 15000
(fixed loading/unloading cost per shipment + fixed transportation cost per shipment) * 𝑄 = (80 + 300) ∗ = $150000
38

Submit You have used 3 of 3 attempts

# Answers are displayed within the problem

Part 2
0 points possible (ungraded)
What is the total cost per year for the company under optimal ordering policy?
Round your answer to the nearest integer.

422000 "

422000

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Practice Problems | Week 10: Transportation II - Freight Transportation Analysis and Case Study | Supply Chain Fundamentals | edX 6/6/21 13:11

Submit You have used 1 of 3 attempts

" Correct

Part 3
0 points possible (ungraded)
What is the total cost per year for the company considering FTL policy?
Round your answer to the nearest integer.

422500 "

422500

Submit You have used 2 of 3 attempts

" Correct

Part 4
0 points possible (ungraded)
Marion has contacted Happy Biking, a bike company also manufacturing in China, and offered them the possibility of shipping together.
Marion proposes to use the same trucks for shipping both skis and bikes, and share the cost of transportation at 50%.

Happy Biking must ship 10,000 pallets a year. All the costs in Part 1 would remain the same, but there will be a new cost related to
sorting of $100 per shipment.

If Happy Biking accepts this offer, what will be Skiski new total cost of transportation per year under FTL policy?
Round your answer to the nearest integer.

760 ! Answer: 330000

760

Explanation
To calculate the new total cost, we will use the same formula we used in Part 1. But now the total number of pallets to ship is
𝑆 = 15000 + 10000 = 25000 pallets per year. And there is a new fixed cost per shipment that should be added to the equation: $100
of sorting cost per shipment.
Modifying 𝑆 and adding the sorting cost, we calculate the total cost again, which is: $660,000 per year.
Since the agreement is to share the cost at 50%, the total cost per year assumed by Skiski would be $330,000

Submit You have used 3 of 3 attempts

# Answers are displayed within the problem

Part 5
0 points possible (ungraded)
Unfortunately, the shared transportation project with Happy Bikes did not work out (Ignore part 4 changes).

Marion wants to explore other possibilities. She believes that money could be saved if the FTL (full truck load) policy changes to a LTL
(less than truckload) policy.

How many pallets should be shipped in each truck to optimize total cost?
Round your answer to the nearest integer.

395 ! Answer: 38
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Practice Problems | Week 10: Transportation II - Freight Transportation Analysis and Case Study | Supply Chain Fundamentals | edX 6/6/21 13:11

395 ! Answer: 38

395

Explanation
The optimal shipment quantity can be calculated using the EOQ formula:

(2) (𝑆) (𝑓𝑖𝑥𝑒𝑑𝑐𝑜𝑠𝑡) (2) (15000) (380)

𝑄∗ = √( ) = √( ) = 37.75
ℎ𝑜𝑙𝑑𝑖𝑛𝑔𝑐𝑜𝑠𝑡 8000
c 38 pallets per shipment

How many truck shipments will be needed per year?

Round your answer to the nearest integer.

! Answer: 395

Explanation
The total number of shipments per year is: 𝑆∗
15000
𝑄
= 38
= 395

Submit You have used 3 of 3 attempts

# Answers are displayed within the problem

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Topic: Week 10 / PP1: Skiski

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Part4 +
discussion posted 10 days ago by brvgrl93
%
The problem says that only the trasportation cost is 50% and not the total cost assuming 15000@10000
&
pallets/yr

660.000/𝑦𝑟 = (3/pallet + 5/𝑝𝑎𝑙𝑙𝑒𝑡) ∗ 25000𝑝𝑎𝑙𝑙𝑒𝑡𝑠/𝑦𝑟+(380/shipment + 100

/𝑠ℎ𝑖𝑝𝑚𝑒𝑛𝑡) ∗ 25000𝑝𝑎𝑙𝑙𝑒𝑡𝑠/𝑦𝑟/40𝑝𝑎𝑙𝑙𝑒𝑡𝑠/𝑠ℎ𝑖𝑝𝑚𝑒𝑛𝑡 + 8000 /pallet/yr * 40pallets/shipment / 2

Then 660.000/𝑦𝑟/2 = 330.000/yr

I think that only the trasportation cost will be shared 50% and not the overall total cost.

The TC should be: TCKL3/𝑝𝑎𝑙𝑙𝑒𝑡 + 5/pallet)*15000pallets/yr + (380

/𝑠ℎ𝑖𝑝𝑚𝑒𝑛𝑡/2 ∗ 15000𝑝𝑎𝑙𝑙𝑒𝑡𝑠/𝑦𝑟/40𝑝𝑎𝑙𝑙𝑒𝑡𝑠/𝑠ℎ𝑖𝑝𝑚𝑒𝑛𝑡 + 100 /shipment *25000pallets/yr /
40pallets/shipment ) @8000/𝑝𝑎𝑙𝑙𝑒𝑡/𝑦𝑟 ∗ 40𝑝𝑎𝑙𝑙𝑒𝑡𝑠/𝑠ℎ𝑖𝑝𝑚𝑒𝑛𝑡/2 = 413.750 /yr

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Practice Problems | Week 10: Transportation II - Freight Transportation Analysis and Case Study | Supply Chain Fundamentals | edX 6/6/21 13:11

/𝑝𝑎𝑙𝑙𝑒𝑡/𝑦𝑟 ∗ 40𝑝𝑎𝑙𝑙𝑒𝑡𝑠/𝑠ℎ𝑖𝑝𝑚𝑒𝑛𝑡/2 = 413.750

Can someone from the staff help me to understand? Thanks

Gabriele

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6 responses
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M_Donczik +
7 days ago
&

Have the same problem. Don´t understand why the holding cost will also be shared, if the question is only
talking about transportation related costs.

&
I guess, we are assuming the total holding cost are similar for both the companies for simplifying the
problem.

posted 6 days ago by NanduVenu

&
and also they said to use calculation from part 1. So I used 38 pallets instead of 40 and of course got the
wrong answer.

posted 6 days ago by dmmarici

&
Also, is the 100$ sorting cost per shipment added to the variable or fixed costs?

posted 6 days ago by dmmarici

&
hey dmmarici, the sorting cost should be fixed cost

posted 4 days ago by piklai

Add a comment

lucianob_chagas +
7 days ago
&

I think only 10,000pallets/40 or 250shipments must be shared. The difference it's up to Skiski who must pay
full costs.

Add a comment

Alex_Cabrera_II +
6 days ago
&

I would assume that you would still have to order FTL, so N K 25000/40 K 625 which have 24 pallets of skis

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Practice Problems | Week 10: Transportation II - Freight Transportation Analysis and Case Study | Supply Chain Fundamentals | edX 6/6/21 13:11

I would assume that you would still have to order FTL, so N K 25000/40 K 625 which have 24 pallets of skis
and 16 of bikes.

The only reasonable costs to share are the fixed. The holding cost is a financial cost of the inventory, it's not
aware of what the rest of the shipment is composed of

Add a comment

SiddarthKumar +
5 days ago
&

Hi brvgrl93,

Your question is pertinent and valid. Here, you need to look at the wording of the question: Marion proposes
to use the same trucks for shipping both skis and bikes, and share the cost of transportation at 50%.

Transportation costs = Variable costs + Fixed costs+ Cycle stock holding cost = (cLV u + cDV u + cUV u)
LQdLS/Qd @ [(cLF @ cDF @ cUF d @ cDV d(distance)][S/Qg @ (h)(Q/2d

Total cost per shipment = (cLF @ cDF @ cUF d @ (cLV u + cDV u + cUV u)(Q) + cDV d(distance) 0Note: No
holding stock cost]

Since it is worded that the cost of transportation is shared at 50%, we have to assume the cycle stock cost
is also shared. If the question mentions that the cost per shipment is shared at 50% or shipment costs are
shared at 50%, then we can ignore cycle holding costs. hope this helps

Siddarth

&
mmmm...should be worded different the question, dont you think??

posted 5 days ago by Saenz-Ibarra

&
Hello, I agree with the previous comments. Including the holding cost in the transportation cost is not
consistent with the transportation costs listed in slide 22 of the Freight Transportat Analysis course.

Rémi

posted 3 days ago by remisoulignac

Add a comment

jim_mammano +
3 days ago
&

This question is very confusing as written. I suspect they are expecting total costs...not transportation cost.

I believe the reason holding costs are reduced by 50% is that you can no longer fit 40 pallets of skis on the
truck. Since half the truck is allocated for bikes you can only fit 20 pallets of skis now. As a result, the
holding cost for skis are reduced by 50%.

Add a comment

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Practice Problems | Week 10: Transportation II - Freight Transportation Analysis and Case Study | Supply Chain Fundamentals | edX 6/6/21 13:11

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isuruovin +
3 days ago
&

I am also 100% agree with the question. Can we have a proper answer from the staff?

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