Case Study- Metal Specialties
Considering the provided information in the case study, I would advise JJ to compute the total cost for every option and the price break. Notably, this will assist her in comparing the options and selecting the one with the lowest cost implication (Chapman et al. 2017). The input information for calculating the total cost for each option is given below:
| Distance | 200 Miles |
| Unit cost | $300 (per cwt) |
| Inventory holding cost (%) | 38% (20+10+8) |
| Inventory holding cost ($) | 114 |
| Ordering cost per order | 40 |
When the company uses its own trucks, the costs will be as follows:
| Repair cost | $20,000 |
| Annual operating costs | $30,000 |
| Lie haul cost at $2.20 per mile | $440 |
| Total transportation cost per order | $50,440 (for a single delivery) |
When the option of using the company’s trucks is considered, total costs for Metal Specialties Inc. will be as follows for various weight categories as drawn from Heavy Metal Transport (HMT).
| Weight category | <150cwt | 150-200cwt | 200-250cwt | >250cwt |
| Price | $4.00 | $3.80 | $3.60 | $3.40 |
| Minimum quantity (CWT) | 0 | 150 | 200 | 250 |
| Maximum Quantity (CWT) | 149 | 199 | 249 | 400 |
| Transportation cost (constant) | $50,440 | $50,440 | $50,440 | $50,440 |
| Inventory holding cost (Max quantity/2* unit inventory holding cost) | $8,943 | $11,343 | $14,193 | $22,800 |
| Purchase cost | $44,700 | $59,700 | $74,700 | $120,000 |
| Ordering cost | $40 | $40 | $40 | $40 |
| Total cost | $103,693 | $121,523 | $139,373 | $193,280 |
Heavy Metal Transport (HMT) Option
| Weight category | <150cwt | 150-200cwt | 200-250cwt | >250cwt |
| Price | $4.00 | $3.80 | $3.60 | $3.40 |
| Minimum quantity (CWT) | 0 | 150 | 200 | 250 |
| Maximum Quantity (CWT) | 149 | 199 | 249 | 400 |
| Transportation cost Price * max. quantity) | $596 | $756 | $896 | $1,360 |
| Inventory holding cost (Max quantity/2* unit inventory holding cost) | $8,943 | $11,343 | $14,193 | $22,800 |
| Purchase cost | $44,700 | $59,700 | $74,700 | $120,000 |
| Ordering cost | $40 | $40 | $40 | $40 |
| Total cost | $53,829.00 | $71,839.20 | $89,829.40 | $144,200 |
Midland Continental Railway Option
| Price/cwt | $3.25 | $3.25 | $3.25 | $3.25 |
| Minimum quantity (CWT) | 200 | 200 | 200 | 200 |
| Transport Cost (Min quantity*Price per cwt) | $650 | $650 | $650 | $650 |
| Inventory holding cost (Max quantity* unit cost) | $0 | $0 | $0 | $0 |
| Purchase cost | $44,700 | $59,700 | $74,700 | $120,000 |
| Ordering cost | $40 | $40 | $40 | $40 |
| Total cost | $45,390 | $60,390 | $75,549.25 | $121,340 |
Comparing the three options, Midland Continental Railway offers the best option regarding the total costs involved. Thus, JJ should pursue contracting Midlands to offer stainless steel transportation services.
References
Chapman, S. N., Arnold, J. T., Gatewood, A. K., & Clive, L. M. (2017). Introduction to materials management. Pearson Education Limited.
ORDER A PLAGIARISM-FREE PAPER HERE
We’ll write everything from scratch
Question 
Case Study 14.1 – Metal Specialties ( See attached document; scroll until you see title Case study 14.1 Metal Specialties for the case study.
Case Study- Metal Specialties
Given the information provided, what would you advise her to do and why?
Show your givens.
Show your calculations.
Tell your recommendation and why.