Question: Your factory needs 1,000,000 light bulbs per day ( assume 7 day a week operations )in order to make your product, a decorative lamp. You

Your factory needs 1,000,000 light bulbs per day ( assume 7 day a week operations )in order to make your product, a decorative lamp. You have to average no more than $750k in fresh light bulbs in raw inventory on site. Your firm "PTP" uses factory gate pricing. At a value of 75 cents a piece and holding costs of 7.5% per year.

Your supplier is in China. It is a 6 day trip from the factory to the port Shensen . The shipper only ships in groups of 5 containers of production per ship, 22 days on route to Seattle and 7 days by rail to your Muncie, IN factory.

What are the average annual holding costs of the pipeline inventory ( average inventory in transit and average daily inventory waiting to be loaded into the plant times the annual holding cost rate)?

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