APICS Certified in Logistics, Transportation and Distribution (CLTD) — Question 35

A carrier takes three weeks to deliver a product which has average sales of 1,000 units per week. The unit cost is $20 each and the carrying cost is 15%. What is the savings in the transportation inventory cost if management decides to change the mode of transportation to decrease time to one week?

Answer options

• A. $2,000
• B. $3,000
• C. $6,000
• D. $9,000

Correct answer: C

Explanation

The correct answer is $6,000, which reflects the savings from reducing the carrying costs associated with holding inventory over a shorter period. The other options do not account for the full impact of the change in delivery time on inventory costs.