A manager must make a decision on shipping. There are two shippers, A and B. Both offer a two-day rate: A for $510 and B for $527. In addition, A offers a three-day rate of $478 and a nine-day rate of $409, and B offers a four-day rate of $459 and a seven-day rate of $420. Annual holding costs are 35 percent of unit price. Three hundred and eighty boxes are to be shipped, and each box has a price of $148. Which shipping alternative would you recommend?

What outputs a and b (in millions of dollars per year) should the two industries generate to satisfy the demand? you may be tempted to say 1,000 and 780, respectively, but things are not quite as simple as that. we have to take into account the interindustry demand as well. let us say that industry a produces electricity. of course, producing almost any product will require electric power. suppose that industry b needs 1o¢ worth of electricity for each $1 of output b produces and that industry a needs 20¢ worth of b's products for each $1 of output a produces?