The Chemco Company uses a highly toxic chemical in one of its manufacturing processes. It must have
Question:
The Chemco Company uses a highly toxic chemical in one of its manufacturing processes. It must have the product delivered by special cargo trucks designed for safe shipment of chemicals. As such, ordering (and delivery) costs are relatively high, at $3600 per order. The chemical product is packaged in 1-liter plastic containers. The cost of holding the chemical in storage is $50 per liter per year. The annual demand for the chemical, which is constant over time, is 7000 liters per year. The lead time from time of order placement until receipt is 10 days. The company operates 310 working days per year. Compute the optimal order quantity, total minimum inventory cost, and the reorder point.
Step by Step Answer:
Operations Management Creating Value Along the Supply Chain
ISBN: 978-1118301173
1st Canadian Edition
Authors: Roberta S. Russell, Bernard W. Taylor, Ignacio Castillo, Navneet Vidyarthi