SCM 404 Day 25 In-class Exercise
Name: _______________
A retail chain has
8
stores in a region supplied from
4
supply sources (
4
types of
products). Trucks have a capacity of
40,000
units and cost
$
1,000
per load plus
$
100
per delivery. The cost of holding one unit in inventory
at retail
for a year is
$
0.20
.
The vice president of supply chain is considering whether to use
direct shipping from suppliers
to retail stores
or
setting up milk runs from suppliers to retail stores
. What network do you
recommend if annual sales
for each product at each retail store
are
960,000
units?
Now, we first consider direct shipping
. Assume
full truckloads
will be shipped from suppliers to
retail stores.
o
Batch size shipped from each supplier to each store:
o
Number of shipments/year from each supplier to each store:
o
Transportation cost per shipment per store:
o
Annual trucking cost for direct network:
o
Average inventory at
each store for each product
:
o
Annual inventory cost for direct network:
o
Total annual cost of direct network=Transportation cost + inventory cost
