A retail chain has 8 stores in a region supplied from 3 supply sources. Trucks have a capacity of 25,000 units and cost $1,200 per load plus $48 per delivery. The cost of holding one unit in inventory at retail for a year is $1.5. The managers will set up milk runs from suppliers to retail stores. Assume that all trucks travel full. Suppliers are considering whether to run a milk run to 2 stores or 4 stores on each truck. Which network should be chosen if annual sales for each product at each retail store are 150,000 units?

A retail chain has 8 stores in a region supplied from 3 supply sources. Trucks have a capacity of 25,000 units and cost $1,200 per load plus $48 per delivery. The cost of holding one unit in inventory at retail for a year is $1.5. The managers will set up milk runs from suppliers to retail stores. Assume that all trucks travel full. Suppliers are considering whether to run a milk run to 2 stores or 4 stores on each truck. Which network should be chosen if annual sales for each product at each retail store are 150,000 units?

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter5: Network Models

Section: Chapter Questions

Problem 68P

See similar textbooks

Similar questions

Suppose the Motorboat dealership in part (a) above dealing in costly motorboats follows the policy of carrying a few units in stock and ordering for replenishment as soon as a motorboat is sold from the stock. The unit cost of the motorboat is $60,000 and the holding or carrying cost is $5,000 per unit per year. The management of Motorboat dealership believe that the shortage cost due to waiting for the motorboat is $2,000 per unit short per month. The demand is seen to be Poisson distributed with an average rate of 2 units per month and the replenishment lead time can be considered to be exponential with a mean of one month. Considering the system as an M/M/s queuing system, find the optimal stock to be carried which can minimize the sum total of carrying and shortage costs.
Evaluate an alternative that involves consolidating all 20-foot container volumes and using onlya single consolidation center in Shanghai/Ningbo. Assume that all the existing 20-foot containervolumes and the existing consolidation center volumes are sent to this single consolidationcenter by suppliers. This new consolidation center volume would be packed into 40-footcontainers, filled to 96 percent, and shipped to the United States. The existing 40-foot volumewould still be shipped direct from the suppliers at 85 percent capacity utilization
The Uptown Kiln is an importer of ceramics from overseas. It has arranged to purchase a particular type of ceramic pottery from a Korean artisan. The artisan makes the pottery in 120-unit batches and will ship only that exact number of units. The transportation and handling cost of a shipment is $7,600 (not including the unit cost). The Uptown Kiln estimates its annual demand to be 900 units. What storage and handling cost per unit does it need to achieve in order to minimize its inventory cost?
The Summer Outdoor Furniture Company produces wooden lawn chairs. The annual demandfrom its store customers is 17,400 chairs per year. The transport and handling costs are $2,600each time a shipment of chairs is delivered to stores from its warehouse. The annual carryingcost is $3.75 per chair. The company is thinking about relocating its warehouse closer to its customers, which would reduce transport and handling costs to $1,900 per order but increase carrying costs to $4.50 per chair per year. Should the company relocate based on inventory costs?
Craftwood Furniture Company is a U.S.–based furniture manufacturer that offshored all of its actual manufacturing operations to China about a decade ago. It set up a distribution center in Hong Kong, from which the company ships its items to the United States on container ships. The company learned early on that it could not rely on local Chinese freight forwarders to arrange for sufficient containers for the company’s shipments, so it contracted to purchase containers from a Taiwanese manufacturer and then sell them to shipping companies at the U.S. ports the containers are shipped to. Craftwood needs 715 containers each year. It costs $265 to hold a container at its distribution center, and it costs $6,000 to process and receive an order for the containers. The cost of not having sufficient containers and delaying a shipment is $14,000 per container. Determine the optimal order size, minimum total annual inventory cost, and maximum shortage level.
K Ruby-Star Incorporated is considering two different vendors for one of its top-selling products which has an average weekly demand of 30 units and is valued at $100 per unit. Inbound shipments from vendor 1 will average 300 units with an average lead time (including ordering delays and transit time) of 4 weeks. Inbound shipments from vendor 2 will average 490 units with an average lead time of 1 week. Ruby-Star operates 52 weeks per year; it carries a 4-week supply of inventory as safety stock and no anticipation inventory. a. The average aggregate inventory value of the product if Ruby-Star used vendor 1 exclusively is $39,000. (Enter your response as a whole number.) b. The average aggregate inventory value of the product if Ruby-Star used vendor 2 exclusively is $ 39,500. (Enter your response as a whole number.) c. How would your analysis change if average weekly demand increased to 60 units per week? The average aggregate inventory value of the product if Ruby-Star used vendor 1…
Evaluate an alternative that involves consolidating all 20-foot container volumes and using onlya single consolidation center in Shanghai/Ningbo. Assume that all the existing 20-foot container volumes and the existing consolidation center volumes are sent to this single consolidationcenter by suppliers. This new consolidation center volume would be packed into 40-footcontainers, filled to 96 percent, and shipped to the United States. The existing 40-foot volumewould still be shipped direct from the suppliers at 85 percent capacity utilization
Jack Ltd is a market leader in the manufacture of apple juice. They operate areorder level system of inventory management, and the following information isavailable for green apples:Average usage 800 per dayMinimum usage 540 per dayMaximum usage 1260 per dayLead time for replenishment 16-20 dayReorder quantity 19,500 applesRequired:ii Calculate the maximum level of inventory
Ruby-Star Incorporated is considering two different vendors for one of its top-selling products which has an average weekly demand of 30 units and is valued at $60 per unit. Inbound shipments from vendor 1 will average 330 units with an average lead time (including ordering delays and transit time) of 4 weeks. Inbound shipments from vendor 2 will average 450 units with an average lead time of 3 weeks. Ruby-Star operates 52 weeks per year; it carries a 4-week supply of inventory as safety stock and no anticipation inventory. A. the average aggregate inventory value of the product if ruby star used vendor 1 exclusively is $_____ (enter your response as a whole number) B. the average aggregate inventory value of the product if ruby sta used vendor 2 exclusively is $______ (enter your response as a whole number) C. how would your analysis change if average weekly demand increased to 140 units per week? the average aggregate inventory value of the product if ruby star used vendor 1…
Ruby-Star Incorporated is considering two different vendors for one of its top-selling products which has an average weekly demand of 30 units and is valued at $100 per unit. Inbound shipments from vendor 1 will average 300 units with an average lead time (including ordering delays and transit time) of 4 weeks. Inbound shipments from vendor 2 will average 490 units with an average lead time of 1 week. Ruby-Star operates 52 weeks per year; it carries a 4-week supply of inventory as safety stock and no anticipation inventory. a. The average aggregate inventory value of the product if Ruby-Star used vendor 1 exclusively is $39,000. (Enter your response as a whole number.) b. The average aggregate inventory value of the product if Ruby-Star used vendor 2 exclusively is $ (Enter your response as a whole number.)
Suppose a Motorboat dealership is dealing in costly motorboats that follow the policy of carrying a few units in stock and ordering for replenishment as soon as a motorboat is sold from the stock. The unit cost of the motorboat is $60,000 and the holding or carrying cost is $5,000 per unit per year. The management of the Motorboat dealership believes that the shortage cost due to waiting for the motorboat is $2,000 per unit short per month. The demand is seen to be Poison distributed with an average rate of 2 units per month and the replenishment lead time can be considered to be exponential with a mean of one month Considering the system as an M/M/s queuing system, find the optimal stock to be carried which can minimize the sum total of carrying and shortage costs.
Ruby-Star Incorporated is considering two different vendors for one of its top-selling products which has an average weekly demand of 50 units and is valued at $75 per unit. Inbound shipments from vendor 1 will average 350 units with an average lead time (including ordering delays and transit time) of 2 weeks. Inbound shipments from vendor 2 will average 500 units with an average lead time of 1 week. Ruby-Star operates 52 weeks per year; it carries a 2-week supply of inventory as safety stock and no anticipation inventory.a. What would be the average aggregate inventory value of this product if Ruby-Star used vendor 1 exclusively?b. What would be the average aggregate inventory value of this product if Ruby-Star used vendor 2 exclusively?c. How would your analysis change if average weekly demand increased to 100 units per week?