Amazon maintains numerous distribution centers across the country, hoping to position stock as close as possible...
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Amazon maintains numerous distribution centers across the country, hoping to position stock as close as possible to demand, in order to reduce response time. When customer orders are placed online, they can be shipped from the closest distribution center that has the item in stock. They use data to predict demand patterns for each center. One item that currently has a consistent demand over the course of the year is a Yankee Candle Small Tumbler Clean Cotton. Suppose demand at a given distribution center is 7,332 per year. The cost for Amazon to place an order to replenish their stock of these is $25. Holding cost is $8 per item per year. Assume a 365 day year. Replenishment leadtime is 6 days. ▬▬▬▬▬▬▬▬▬▬▬▬ a. Suppose Amazon want to order twice a month, or 24 times per year. How many would they order at a time? b. What would be the most economical order quantity (EOQ) for this item? c. What would be the annual ordering cost if they used the EOQ? jd. Would ordering the EOQ lead to more or less orders per year than 24 orders per year? e. what would be the best reorder point to prevent stockouts and minimize cost? f. In the morning, they counted inventory to be 147. Throughout the day, they sold 34 candles. Should Amazon place an order for replenishmer Amazon maintains numerous distribution centers across the country, hoping to position stock as close as possible to demand, in order to reduce response time. When customer orders are placed online, they can be shipped from the closest distribution center that has the item in stock. They use data to predict demand patterns for each center. One item that currently has a consistent demand over the course of the year is a Yankee Candle Small Tumbler Clean Cotton. Suppose demand at a given distribution center is 7,332 per year. The cost for Amazon to place an order to replenish their stock of these is $25. Holding cost is $8 per item per year. Assume a 365 day year. Replenishment leadtime is 6 days. ▬▬▬▬▬▬▬▬▬▬▬▬ a. Suppose Amazon want to order twice a month, or 24 times per year. How many would they order at a time? b. What would be the most economical order quantity (EOQ) for this item? c. What would be the annual ordering cost if they used the EOQ? jd. Would ordering the EOQ lead to more or less orders per year than 24 orders per year? e. what would be the best reorder point to prevent stockouts and minimize cost? f. In the morning, they counted inventory to be 147. Throughout the day, they sold 34 candles. Should Amazon place an order for replenishmer
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SOLUTION a If Amazon wants to order the Yankee Candle Small Tumbler Clean Cotton 24 times per year they would order Order quantity Demand per year Num... View the full answer
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Authors: Alvin A Arens, Peter J. Best, Greg Shailer, Brenton Fiedler
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