Consider a supermarket deciding on the size of its replenishment order from Proctor & Gamble. What costs should it take into account when making this decision?
Answer to relevant QuestionsDiscuss how various costs for the supermarket change as it decreases the lot size ordered from Proctor & Gamble. What is the difference between lot size-based and volume-based quantity discounts? Explain how a reduction in lead time can help a supply chain reduce safety inventory without hurting product availability. Consider two products with the same cost but different margins. Which product should have a higher level of product availability? Why? Wal-Mart designs its networks so that a DC supports several large retail stores. Explain how the company can use such a network to reduce transportation costs while replenishing inventories more frequently.
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