Question: need help understanding steps to how to get part C. correct answers are below. 7.3 The Home and Garden (HG) chain of be imports decorative
need help understanding steps to how to get part C. correct answers are below.
7.3 The Home and Garden (HG) chain of be imports decorative planters from Italy. Weekly superstores demand for planters averages 1,500 with a standard deviation of 800. Each planter costs $10. HG incurs a bot holding cost of 25% per year to carry inventory. HG has an opportunity to set up a superstore in the Phoenix region. Each order shipped from Italy incurs a fixed transportation and delivery cost of $10,000. 990 Consider 52 weeks in the year. bite a. Determine the optimal order quantity of planters for HG. vaste baasiga b. If the delivery lead time from Italy is 4 weeks and HG wants to provide its customers a cycle service level of 90%, how much safety stock should it les carry? waiver B Tai c. Fastship is a new shipping company that promises to reduce the delivery lead time for planters from 4 weeks to 1 week using a faster ship and expedited customs clearance. Using Fastship will add $0.2 to the cost of each planter. Should HG go with Fastship? Why or why not? Quantify the impact of the change. a. Q = 24,980 (rounded up from 24,979.992) b. SS=2050.48 c. Extra Procurement Cost = $15,600.00 Extra Ordering Cost = $310.70 Savings in holding cost = $2,201.14 Cost increase = $13,709.57

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