The Bijou Theater in Hermosa Beach, California, shows vintage movies. Customers arrive at the theater line at the rate of 100 per hour. The ticket seller averages 30 seconds per….
Which alternative should be chosen, if they expect the number of cartons to be distributed will be 600,000 per year?
Two alternatives are being considered for warehousing and distributing canned
foods in a sales region. The cans come in cartons of 24 cans per carton. The two
alternatives are: Alternative A. Have your own distribution system. The administrative costs
are estimated at $43,000 per year, and other general operating expenses are
$0.009 per carton. A warehouse will be purchased for $300,000.
• Alternative B. Sign an agreement with independent distributor, which asks
payment of $0.10 per carton distributed.
Assume a study period of 10 years, and that the warehouse can be sold at the end
of this period for $200,000. Which alternative should be chosen, if they expect
the number of cartons to be distributed will be 600,000 per year?