Free GMAT Practice Question

Extract from the freight review prepared for the board of a regional produce cooperative

The cooperative ships crates of produce from its packing house to three city depots once a week. All of that traffic currently goes to Carrier P; this review was commissioned to test whether Carrier Q would be cheaper.

Carrier P prices crate by crate. It charges a base rate of $1.10 for each crate, plus $0.06 for each crate for every kilometre between the packing house and the depot that crate is going to.

Carrier Q prices by the pallet, at $260 a pallet. A pallet holds up to 40 crates, and a partly filled pallet is billed as a full one.

Weekly volumes and depot distances are in the Depots tab. Two further terms of the two quotations came to light after this extract was drafted; they are in the Correspondence tab.

Weekly shipping pattern from the packing house.

From: Halima Bakayoko, logistics coordinator
To: Ravi Chandrasekaran, board secretary
Subject: Two terms the review extract leaves out

Carrier P's per-crate rates are quoted correctly in the review, but P also charges a handling fee of $75 for each depot it serves on each weekly run. Carrier Q charges no handling fee.

Carrier Q, for its part, will not accept an order of fewer than three pallets for any one depot: a depot needing only one or two pallets is billed for three.

From: Ravi Chandrasekaran
To: Halima Bakayoko
Subject: RE: Two terms the review extract leaves out

Noted, and thank you. For the board's purposes, remember that nothing in either quotation obliges us to give one carrier all three depots — we are free to use whichever carrier we prefer at each depot.