Question: FIXIT is a hardware chain focused on do-it-yourself customers. FIXIT operates in the Pittsburg area and has a distribution center that receives shipments from its

FIXIT is a hardware chain focused on do-it-yourself customers. FIXIT operates in the Pittsburg area and has a distribution center that receives shipments from its supplier, ACME, located in Portland. Demand at FIXIT each month is 30000 packs of bulky widgets. Currently shipments from ACME to FIXIT are sent by truck, the capacity of a truck is 5000 packs. Transit time for the truck from Portland to Pittsburg is 5 days. In addition, analysis of the data shows that the lead time has a standard deviation of 2 days. FIXIT's accounting group has estimated that the annual holding cost is 20 % of the cost of the product. ACME supplies a case of widgets for a price of $15 per pack. Assume a desired service level of 95%. Full truckloads are shipped. The cost for a truckload shipment from Portland to Pittsburg, by third party carrier, is $3000. Assume 1 month=30 days. (a) What is the total logistics cost of the current system in $ per month?

Transportation cost per month:

Safety stock holding cost per month:

Cycle Stock holding cost per month:

Pipeline holding cost per month:

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