Question: 9 . A retailer has four store locations A , B , C , and D . Each store orders from an external supplier based
A retailer has four store locations A B C and D Each store orders from an external supplier based outside the city. Table contains information about the daily demand at each location and the monthly rental cost. Each store uses a periodic review model. They order once in days, the product is received days later, and the service level is The retailer wants to consolidate by closing the stores and opening a new store at a central location E The estimated demand at location E and the rental cost is also in Table The new location will continue to order once in days, the lead time will remain days, and the service level will continue at
Location Daily Demand Average Standard Deviation of Daily Demand Rental Cost Monthly
A $
B $
C $
D $
E $
Transportation costs from the supplier to the store are approximately the same for each of the locations A B C D and E at $ Unit. The retailer purchases each unit for $ and sells for $ Cost of holding a unit in inventory is $ month. The retailer expects to save $ month in overhead and labor costs by reducing the number of locations. Assume that there are days in a month.
a What is the average inventory level at Store A
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