Question

A shipment worth $109,500 has to be delivered from a supplier to its customer. There are 2 options: Option 1: use the rail system which takes 30 days at a cost of $4,000. Option 2: use a trucking company which take 20 days at a cost of $5,000. Assume 365 days per year. What is the cost difference between the 2 options?

 Option 2 is $2,000 more expensive than Option 1

 Option 1 is $1,000 cheaper than Option 2

 Option 1 is $1,000 more expensive than Option 2

 Option 2 is $2,000 cheaper than Option 1

Answer 1

Shipment worth

109500

Option 1: Rail system
30 days at a cost of 4000
Option 2: trucking company
20 days at a cost of 5000
365 days a year

Normalizing Option 1 cost for 20 days gives

30/20 X 4000 = 6000

Hence option 1 is 6000-5000 = 1000 more expensive than option 2