Suppose there is a clothing manufacturer in Peru that regularly ships products to the US. The Peruvian manufacturer clothing for the US at a rate of 3,000 pounds every week. Shipments are sent from Peru to the US at periodic intervals. There is a fixed cost for each shipment of $2000. There is also a transportation cost that depends on the shipment size, using the transportation rates shown in the table below. Shipment size Rate in $/cwt <5,000 lbs 800 5,000 – 10,000 lbs 600 >10,000 lbs 300 a) Suppose there is also an inventory cost of $1 per pound for each week products are held by the manufacturer before they are sent. If the Peruvian manufacturer sends a shipment to the US every three weeks, then what would be the total annual cost? b) Now suppose the inventory cost is not known (it is not $1 per pound per week as in part a). If the Peruvian manufacturer was to send a shipment every five weeks (not as in part a), then how large can the inventory cost be in $ per pound for each week delayed if the total cost to ship every fiveweeks is to be equal to $12,000 per week? weeks is to be equal to $12,000 per week?
Suppose there is a clothing manufacturer in Peru that regularly ships products to the US. The Peruvian manufacturer clothing for the US at a rate of 3,000 pounds every week. Shipments are sent from Peru to the US at periodic intervals. There is a fixed cost for each shipment of $2000. There is also a transportation cost that depends on the shipment size, using the transportation rates shown in the table below.
|
Shipment size |
Rate in $/cwt |
|
<5,000 lbs |
800 |
|
5,000 – 10,000 lbs |
600 |
|
>10,000 lbs |
300 |
a) Suppose there is also an inventory cost of $1 per pound for each week products are held by the manufacturer before they are sent. If the Peruvian manufacturer sends a shipment to the US every three weeks, then what would be the total annual cost?
b) Now suppose the inventory cost is not known (it is not $1 per pound per week as in part a). If the Peruvian manufacturer was to send a shipment every five weeks (not as in part a), then how large can the inventory cost be in $ per pound for each week delayed if the total cost to ship every fiveweeks is to be equal to $12,000 per week?
weeks is to be equal to $12,000 per week?
Step by step
Solved in 2 steps
