St.

Louise de Marillac College of Sorsogon

Higher Education Department
Sorsogon City
2nd Semester, S.Y 2020-2021

LOGISTICS MANAGEMENT

Name: _______________________________ Score: ____________

Year & Course: ________________________
I. A. Identification: Identify the following, write the letter of your answer on the
space.
Case 1: Finished goods are to be shipped from a plant inventory to a warehouse inventory some distance
away. The expected volume to be shipped in a year is 2,500,000 lb. The product is worth 20 per lb. and
the plant and carrying costs are 20% per year.

Other data include the following :

TRANSPORT CHOICE RATE Transit days shipment size

RAIL 0.25 25 150,000
TRUCK 0.50 15 50,000
AIR 1.00 1 15,000

Required :

1. Compute for the transport selection Analysis.

2. Recommend which transport choice would be the best for the finish goods

Answer:

1. Compute for the transport selection Analysis.

TRANSPORT SELECTION ANALYSIS

Computatio
Cost Type RAIL TRUCK AIR
n

Transportation 0.25 × 2500000 0.50 × 2500000 1 × 2500000

RD = 625,000 = 1,250,000 = 2,500,000

In-transit
Inventory
ICQ/365 0.20(20)× 2500000(25) 0.20(20)× 2500000(15) 0.20(20)× 2500000(1)
365 365 365

= 684,931.5068 = 410,958.9041 = 27,397.26027

Plant Inventory

0.20(20)× 150000 0.20(20)× 50000 0.20(20)× 15000

2 2 2
ICQ/2
= 300,000 = 100,000 = 30,000
 St. Louise de Marillac College of Sorsogon
Higher Education Department
Sorsogon City
2nd Semester, S.Y 2020-2021

LOGISTICS MANAGEMENT

Whse Inventory

ICQ/2 [ 0.20(20 .25)]×150000 [0.20(20. 50)]× 50000 [0.20(2 1)]× 15000

2 2 2
(include
transport = 303,750 = 102,500 = 31,500
rate)

Total 1,913,681.507 1,863,458.904 2,588,897.26

2. Recommend which transport choice would be the best for the finish goods

Based on the transport selection computation above, the recommended transportation

choice is TRUCK which has the lowest total cost with an estimated amount of 1,863,458.904.
Companies would probably choose the type of transportation with lesser expense and considering
the availability of transportation road, which might not have a train route or airport nearby.