The Prompt Corporation purchases product from two suppliers, A and B. Supplier A is located in Austin TX, and supplier B in Carthage, TN. Supplier A supplies component a and supplier B supplies component b. These components are used to make gizmos of two types, I and II. Gizmo I is made in Helena, MT. and Gizmo Il is made in Duluth, MN. Each manufacturing plant makes 50 gizmos a day. Each gizmo requires unit each of components a and b.

Currently loads are shipped full truckload from suppliers directly to plants. Trucks used have a capacity of 500 units and cost $2,500 per truckload shipped. Holding cost per component per day is $0.50. Transit time per route is 4 days.

a. Provide the total supply chain costs for this system.

b. Prompt has realized that it can obtain larger trucks with a capacity of 1,000 units for a cost of $3,500 per route and the same transit time of 4 days per route. If Prompt has these trucks should all shipments be full truckload or less-than-full truckload? What will be the associated total supply chain costs to use these trucks with the appropriate level of loads on these trucks? Are the costs lower than (3a)? Explain why or why not.