A company pursuing vertical integration can gain market power over its competitors through all of the following EXCEPT: a. avoid
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Answer:
Yes, firm should consolidate shipment as it give saving of $990.
Explanation:
Given: Three customer order 12000 lbs of coal each.
Cost of individual shipment is $15.75 per 100 lbs
Cost of consolidated shipment is $10.50 per 100 lbs with $300 fees.
Now, lets find out cost for all 3 customer in both the shipment.
Cost of individual shipment=
= $1890
Next, cost for all three customer´shipment is
∴ Cost of shipment for three customer through individual shipment is $5670
Cost of consolidated shipment:
Next, cost for all three customer with the $300 fee=
∴ Cost of shipment for three customer through consolidated shipments is $4680
Saving with consolidated shipment =
Now, we can say it is profitable for firm to consolidate shipment as it give saving of $990.