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Essen Beer Company has a brewery in Michigan's Upper Peninsula and is setting up distribution at Jackson, Michigan, in the state's Lower Peninsula.
Essen Beer Company has a brewery in Michigan’s Upper Peninsula and is setting up distribution at Jackson, Michigan, in the state’s Lower Peninsula. Essen packages its beverages in barrels and in 24-can cases. Barrels must be maintained at temperatures below 60 degrees Fahrenheit until retail delivery. The company’s logistics department must determine whether to operate individual private warehouses for barrels and cases or to utilize a single warehouse with barrels placed in a carefully controlled environment separate from cases. Assume that cases are not to be stored or transported in refrigerated environments.Essen experiences a weekly demand of 300 barrels and 5,000 cases. The company has arranged truckload transportation with Stipe Trucking Service. Stipe operates refrigerated and non-refrigerated trailers, as well as multi-compartmented trailers that are half refrigerated and half not. A refrigerated truckload can hold 72 barrels, while a non-refrigerated truckload holds 400 cases. The multi-compartmented can hold 36 barrels and 200 cases. The costs for these services and other related expenses are detailed below.Truckload costs:Refrigerated
