Question: Calculate a total cost calculation for ACME Supply using the following data. Required to calculate total cost calculation for operating one DC and two DCs.

Calculate a total cost calculation for ACME Supply using the following data. Required to calculate total cost calculation for operating one DC and two DCs.

Sales per year: $2,500,000

Property tax: 12% (both locations)

Operating days per year: 260

Staff per DC: 90

Warehouse fixed cost: $1,800,000

Warehouse variable cost per case: $0.45

TL per year with 1 DC: $175,000

Increase in TL with a new DC: $70,000

LTL per year with 1 DC: $250,000

Supplier incoterms: EXW

Lead time: Supplier to DC = 1 day

Customer service level target: 98% fill rate

Increase in lead time with each additional DC: 30%

Return on assets target: 11%

Base inventory with 1 DC: $900,000

SS with 1 DC: $ 150,000

Inventory Carrying Cost: 28%

Reorder cost per DC: $300

Total LTL cost decrease by 1 DC to 2 DCs: 29%

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