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August 18, 2023

Case 9.2. Baseball Card Emporium

Baseball Card Emporium (BBE) of Lewistown, Pennsylvania, is a distributor of baseball cards to sports card retailers. Its market area encompasses most of Pennsylvania, eastern Ohio, and New Jersey. The cards are printed in Neenah, Wisconsin, and currently shipped to Lewistown via motor carrier transportation. Kenny Craig, vice president of logistics, has asked his staff to evaluate using air carrier service to ship the cards.

Nick Gingher, director of distribution, has collected the following information:

Annual demand: 6,000 cases of cards

Case value (price): $96 each

Inventory carrying cost (annual): 30%

Cost per order to replenish inventory: $75

In-transit inventory carrying cost: 18%

Transit time using motor carrier (parcel ground): 4 days

Cycle time using motor carrier (parcel ground): 7 days

Transit time using air carrier: 1 day

Cycle time using air carrier:2 days

Motor carrier rate: $1.20 per cwt. (100 lbs.)

Air carrier rate: $2.50 per cwt.

Unit weight: 50 lbs. per case

Answer the question below when the case information provided.

1. Based on the data provided in Case 9.2, calculate the total cost EOQ BBE ($).

2. Based on the data provided in Case 9.2, calculate the EOQ BBE (in pounds).

3. What is the total cost of using motor transportation?

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