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Astro Industries of Minneapolis, MN, makes weekly shipments to 12 customers in the Dallas area.

Astro Industries of Minneapolis, MN, makes weekly shipments to 12 customers in the Dallas area. Each customer's order weighs, on average, 1,500 pounds. A direct truck shipment from Minneapolis to Dallas costs $1,500. The maximum load per truck is 30,000 pounds.


 a) How much would it cost Astro to make direct, single-order shipments to all of its customers each week? What would the utilization level for the trucks look like? (5 points)

 b) Suppose a Dallas-based warehousing firm has agreed to run a break-bulk warehousing operation for Astro at a cost of $75 per hundred-weight. Local deliveries to each customer would tack on another $125 per customer per week. How much money could Astro save by going with the break-bulk solution? What would the utilization level for truck be in this case? (8 points)

 c) How high would the warehousing cost (currently at S75 per hundred-weight) have to be before break-bulk warehousing is no more attractive than direct shipments? (5 points) Note: You can solve Parts a and b together as we did in class practice problem.

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