Question: A large distributor has 5 retail outlets. Currently each outlet manages its ordering independently. Demand at each retail outlet averages 2 0 0 0 per

A large distributor has 5 retail outlets. Currently each outlet manages its ordering independently. Demand at each retail outlet averages 2000 per day. Assume there are 250 days per year. Each unit of product costs 200 dollars, and holding cost per unit of product per year is 20% of the product cost. The fixed cost of each order (administrative plus transportation) is 1500 dollars in the decentralized system. The fixed cost of each order in the centralized system is twice of the decentralized system. Holding cost per unit are the same in the two systems.

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