Problem 4: Disinfecting Wipes

KU School of Business estimates that the school building will require 50 cans of disinfecting wipes per week for the foreseeable future. To ensure safety of the student and staff, they have instituted a strict policy of never running out of wipes. The school buys each can at a retail price of $10, besides which, the supplier charges a fixed fee of $50 per order irrespective of the order size. Since disinfecting wipes dry out very fast, the school estimates a holding cost of 0.20% of the retail price per can per week.

1. How many cans should the school buy in each order to minimize the total ordering and inventory holding cost? If your answer is not an integer, provide at least three decimal places, e.g., 7.500.

2. What is the minimum per week total cost (ordering and inventory holding cost) the school can achieve by carefully selecting the optimal ordering quantity? If your answer is not an integer, provide at least three decimal places, e.g., 7.500

3. Suppose the supplier has a leadtime of two weeks. How many cans of disinfecting wipes should the school have in hand when they place a new order to the supplier? If your answer is not an integer, provide at least three decimal places, e.g., 7.500.

4. Suppose KU finds that the demand for wipes is 50 cans per week at each of the n departments in the Lawrence campus (including the business school). Hence, KU decides to manage disinfecting wipe inventory at a central location from which each department can receive wipes as and when required at no additional cost. If the minimum per week total cost that you calculated in Question 19 is C*, what will be the minimum per week total cost (ordering and inventory holding cost) for the central location?