Question: I think I have this figured out, but need a double check... Thank you Here is the question: Regional distributors are currently using continuous review

I think I have this figured out, but need a double check... Thank you

Here is the question: Regional distributors are currently using continuous review inventory policy. Compute and describe their inventory management policy and associated cost. Ignore inbound and outbound transportation cost. Provide answers and calculations for order quantity, demand during lead time, safety stock, average inventory level, inventory holding cost per week, ordering cost per week, and total cost per week.

The service level is 90% and the average lead time is 2 weeks.

Here is the style I used to answer.

Q*

Ddlt

SS

Avg Inv

Inv cost

Ord Cost

Tot Cost

Atlanta

Boston

Chicago

Dallas

LA

Total cost of the distribution system

Supporting info:

Inbound TRANSPORTATION COSTS PER UNIT PRODUCT
Warehouse Inbound Outbound
Atlanta $ 12.00 $ 13.00
Boston $ 11.50 $ 13.00
Chicago $ 11.00 $ 13.00
Dallas $ 9.00 $ 13.00
Los Angels $ 7.00 $ 13.00
Table 3: Outbound Transportation Costs per Unit in Single Centralized System
Warehouse atlanta boston chicago dallas los angles
Atlanta $ 13.00
Boston $ 16.00 $ 13.00
Chicago $ 16.00 $ 10.00 $ 13.00
Dallas $ 17.00 $ 17.00 $ 17.00 $ 13.00
Los Angels $ 19.00 $ 19.00 $ 18.00 $ 10.00 $ 13.00
Table 4: Ordering Cost and Holding Costs (per unit per week)
cost at ordering cost holding cost
current system regional warehouse $ 5,550.00 $ 1.25
central warehouse central warehouse $ 5,550.00 $ 1.25
mixed model central warehouse $ 3,000.00 $ 1.00
fegional wareshoue $ 3,000.00 $ 1.25
HISTORICAL demand for 12 weeks
Week 1 2 3 4 5 6 7 8 9 10 11 12
Atlanta 33 45 37 38 55 30 18 58 47 37 23 55
Boston 26 35 41 40 46 48 55 18 62 44 30 45
Chicago 44 34 22 55 48 72 62 28 27 95 35 45
Dallas 27 42 35 40 51 64 70 65 55 43 38 47
Los Angels 32 43 54 40 46 74 40 35 45 38 48 56

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related General Management Questions!