Logistics and Transportation
Autor: Patrick Bernardo • April 22, 2015 • Coursework • 882 Words (4 Pages) • 740 Views
Patrick Bernardo
Logistics and Transportation
Prof Frazee
Wednesday 6:30-9:20
Problem Set #2 HW6 November 12, 2014
#19 and 21
19. Cost of going rate of pilferage (with no added security):
Cost = volume x pilferage rate x lost revenue/bottle = 9,600,000 volume x .004 x $4.50/bottle = $172,800
(Plan A )-
Added cost: Wages and benefits: $14.50/hr. x 24 hrs/day x 365 days + 4 ($2,000) = $135,020
Product still pilfered: 9,600,000 volume x .002 x $4.50/bottle = 86,400
Total Annual Cost of Plan A: $221,420
(Plan B )-
Added cost:
Wages and benefits:
Specialist’s salary and benefits: = $ 49,000
Equipment: $120,000 + $8,000 + (4800/mo. X 12 mos) = 25,600 8 years
Product still pilfered:
9,600,000 volume x .001 x $4.50/bottle = 43,200
Total Annual Cost of Plan B: $117,800
(Plan C)-
Added cost:
Wages and benefits:
$12/hr. x 24 hrs/day x 365 days + 4 ($1,000) = $109,120
Equipment: (6 x $1,200) + $36,000 = 3,600 12 years
Product still pilfered: 9,600,000 volume x .0005 x $4.50/bottle = 21,600
Total Annual Cost of Plan C: $134,320
Plan B (barcode technology) offers the lowest combination of added investment and remaining product pilferage ($117,800). Video surveillance (Plan C) offers the next cheapest ($134,320) still better than $172,800 expected loss associated with no action. Hiring four security guards (Plan A) represents the most expensive plan costing $221,420.
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