ABC is an online retailer of vitamins. The demand for vitamins is 3,600 bottles per year. ABC incurs a fixed ordering cost of $100 each time a bottle is ordered, and a holding cost is $8.00. The supplier charges $10.00 for each bottle of vitamins purchased. Each time ABC place an order, the supplier has to process, pack, and ship the order. The supplier can pack each bottle at a steady rate that matches the demand. The supplier incurs a fixed-order filling cost of $700, a production cost of $4 per bottle, and a holding cost is $1.00. To minimize a supply chain's total inventory cost, both ABC and the supplier decide to coordinate and determine the optimal order quantities. By doing so, there is an opportunity for the supply chain to save the total inventory cost. Calculate down to two decimal points

a) Determine the optimal order quantities for ABC based on no coordination between ABC and the supplier.

(b) What is the supply chain (ABC+Supplier) total inventory cost (annual inventory ordering + annual inventory holding) based on no coordination between ABC and the supplier?

(c) Determine the optimal order quantities for ABC when ABC and the supplier coordinate.

(d) What is the supply chain (ABC+Supplier) total inventory cost (annual ordering + annual holding) when are both coordinated with each other?

Answer rating: 100% (QA)

a The optimal order quantity for ABC when there is no coordination between ABC and the supplier is 3600 bottles per year This is calculated by finding the Economic Order Quantity EOQ which is the orde... View the full answer