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?
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?
Chapter15: Retailing, Direct Marketing, And Wholesaling
Section15.1: L.l.bean: Open 24/7, Click Or Brick
Problem 3VC
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The Summer Outdoor Furniture Company produces wooden lawn chairs. The annual demand
from its store customers is 17,400 chairs per year. The transport and handling costs are $2,600
each time a shipment of chairs is delivered to stores from its warehouse. The annual carrying
cost 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?
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