Question: ANWER THE QUESTION NUMBER (B) PLEASE... 10 points The manager of a car wash received a revised price list from the vendor who supplies soap,

ANWER THE QUESTION NUMBER (B) PLEASE...

10 points The manager of a car wash received a revised price list from the vendor who supplies soap, and a promise of a shorter lead time for deliveries. Formerly the lead time was four days, but now the vendor promises a reduction of 25 percent in that time. Annual usage of soap is 4,500 gallons. The car wash is open 360 days a year. Assume that daily usage is normal, and that it has a standard deviation of 2 gallons per day. The ordering cost is $30 and annual carrying cost is $3 a gallon. The revised price list (cost per gallon) is shown in the following table: a. What order quantity is optimal? b. What ROP is appropriate if the acceptable risk of a stockout is 1.5 percent? Quantity Unit Price $2.00 1-399 400-799 1.70 1.62 800 +

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