Question: Aggregation with a capacity constraint WW Grainger sources products from many suppliers and is considering aggregation of its inbound shipments to lower costs. In particular,
Aggregation with a capacity constraint
WW Grainger sources products from many suppliers and is considering aggregation of its inbound shipments to lower costs. In particular, WWG is considering suppliers. WWG procures units of product annually from each of these three vendors. WWG uses a thirdparty logistics PL contractor, who charges a fixed transportation cost of $ per order delivery regardless of order size The PL company also charges $ per pickup. Each unit of the three products costs $ and WWG incurs a holding cost of Grainger is considering whether aggregating products joint ordering and delivery from all suppliers in one periodic inbound shipment.
a What is the optimal order frequency and order size if not aggregate? What is the total cost?
b What is the optimal order frequency and order size if aggregate? What is the total cost?
c If the truck has a capacity of units, is the plan from part b feasible. If not, suggest an alternative plan.
Step by Step Solution
There are 3 Steps involved in it
1 Expert Approved Answer
Step: 1 Unlock
Question Has Been Solved by an Expert!
Get step-by-step solutions from verified subject matter experts
Step: 2 Unlock
Step: 3 Unlock
