A jeweler has a distribution center in Atlanta (3-Digit ZIP…
A jeweler has a distribution center in Atlanta (3-Digit ZIP 303) and a store in Saint Augustine, Florida (3-Digit ZIP 320). The USPS categorizes shipments from 3-Digit ZIP 303 to 3-Digit ZIP 320 as Zone 3 shipments. The store in Saint Augustine sells $1,000,000 worth of goods (valued at cost of goods) and the average value per pound of the company’s goods is $1,000/lb. The company uses a 15% inventory holding cost. Ignore inventory investment in shipping at the DC — the USPS picks up from the DC on a schedule independent of the shipment size. Question: From a purely financial perspective, what is the ideal shipment size in pounds per shipment to the store in Saint Augustine using the USPS as the carrier? Download Table 1 to find the postage costs per package based on the weight of the package and the Zone of the shipment. Remember there are 16 ounces in a pound and note that Table 1 includes first, weight ranges by ounce and then weight ranges by pound. Table 1: Postage Costs per package based on Weight and Zone.
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