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 3 suppliers. WWG procures 12000 units of product annually from each of these three vendors. WWG uses a third-party logistics (3PL) contractor, who charges a fixed transportation cost of $3000 per order delivery (regardless of order size). The 3PL company also charges $200 per pickup. Each unit of the three products costs $150 and WWG incurs a holding cost of 20%. Grainger is considering whether aggregating products (joint ordering and delivery) from all 3 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 2000 units, is the plan from part (b) feasible. If not, suggest an alternative plan.
 Aggregation with a capacity constraint WW Grainger sources products from many

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