Question: Problem 3 (14 points) Vinos de America is a small importer and distributor of Latin American wine in Australia. The company most sold wine in

Problem 3 (14 points) Vinos de America is a small

Problem 3 (14 points) Vinos de America is a small

Problem 3 (14 points) Vinos de America is a small importer and distributor of Latin American wine in Australia. The company most sold wine in Australia is the Argentinean Alma Negra Malbec. The weekly demand for this wine is around 1.000 bottles per month. The price Vinos de America pays for each bottle is $10. The shipment costs are 1,200 dollars (assume that this is a fixed price, independent on the number of bottles shipped). The annual inventory cost for the wines (as a percentage of the product cost for Vinos de America) is 30%. The delivery lead-time is 2 months. Question A (2 points): Use the Economic Order Quantity (EOQ) model to find the number bottles of Alma Negra Malbec that Vinos de America should order in order to minimise the total ordering and inventory costs. Question B (2 points): State the amount of time elapsed between two consecutive orders if the firm uses the EOQ model. Express your answer in days. Question C (2 points): Suppose Vinos de America makes orders of a size 6,000 bottles per shipment. How much money is Vinos de America spending in terms of shipping cost every year? Question D (3 points): Suppose that the ordering cost is composed of a fixed amount of $1,200 plus an extra $1 per bottle ordered. Decide whether the optimal order quantity stays the same under this new condition, increases, or decreases. Justify your answer. Question E (5 points): Suppose that the demand is no longer deterministic. The monthly demand follows a Normal Distribution with a mean of 1,000 bottles and a standard deviation of 20 bottles. (i) Calculate the order quantity. (ii) If the re-order point is r = 2,500 bottles, what is the probability of running out-of-stock in each cycle

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