Question: A large distributor has 9 retail outlets. Currently each outlet manages its ordering independently. Demand at each retail outlet averages 2 0 0 0 per

A large distributor has 9 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 10% 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.
1. How much does EACH warehouse need to order individually to minimize the total cost in the DECENTRALIZED system?
The potential answers are:
A: 3904 units.
B: 3953 units.
C: 4000 units.
D: 7746 units.
E: 8660 units.
2. How much should ALL the warehouses order together to minimize the total cost in the CENTRALIZED system?
The potential answers are:
A: 14606 units.
B: 36742 units.
C: 19365 units.
D: 12344 units.
E: 12500 units.
3. Compute the total ordering and carrying costs of ALL warehouses in the DECENTRALIZED system.
The potential answers are:
A: 226274 dollars.
B: 1558846 dollars.
C: 464758 dollars.
D: 627069 dollars.
E: 1224745 dollars.
4. Compute the total ordering and carrying costs of ALL warehouses in the CENTRALIZED system.
The potential answers are:
A: 262907 dollars.
B: 734847 dollars.
C: 227684 dol- lars.
D: 328634 dollars.
E: 443405 dollars.
5. Compute the flow time in the DECENTRALIZED system. The potential answers are:
A: 2.17 days.
B: 2.44 days.
C: 1.98 days.
D: 1.67 days.
E: 2.42 days.
6. Compute the flow time in the CENTRALIZED system.
The potential answers are:
A: 1.35 days.
B: 1.02 days.
C: 1.54 days.
D: 1.25 days.
E: 1.05 days.

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