13.20. Southwood Furniture Company is a U.S.-based furniture manufacturer that offshored all of its actual manufacturing opera- tions to China about a decade ago. It set up a distribution center in Hong Kong from which the company ships its items to the United States on container ships. The company learned early on that it could not rely on local Chinese freight forwarders to arrange for sufficient containers for the company's shipments, so it contracted to purchase containers from a Taiwanese manufacturer and then sell them to shipping companies at the U.S. ports the containers are shipped to. Southwood needs 715 containers each year. It costs $1200 to hold a container at its distribution center, and it costs $6000 to receive an order for the containers. Determine the optimal order size, min- imum total annual inventory cost, number of annual orders, and time between orders.

Practical Management Science
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ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
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13.20. Southwood Furniture Company is a U.S.-based furniture
manufacturer that offshored all of its actual manufacturing opera-
tions to China about a decade ago. It set up a distribution center in
Hong Kong from which the company ships its items to the United
States on container ships. The company learned early on that it could
not rely on local Chinese freight forwarders to arrange for sufficient
containers for the company's shipments, so it contracted to purchase
containers from a Taiwanese manufacturer and then sell them to
shipping companies at the U.S. ports the containers are shipped to.
Southwood needs 715 containers each year. It costs $1200 to hold
a container at its distribution center, and it costs $6000 to receive
an order for the containers. Determine the optimal order size, min-
imum total annual inventory cost, number of annual orders, and
time between orders.
Transcribed Image Text:13.20. Southwood Furniture Company is a U.S.-based furniture manufacturer that offshored all of its actual manufacturing opera- tions to China about a decade ago. It set up a distribution center in Hong Kong from which the company ships its items to the United States on container ships. The company learned early on that it could not rely on local Chinese freight forwarders to arrange for sufficient containers for the company's shipments, so it contracted to purchase containers from a Taiwanese manufacturer and then sell them to shipping companies at the U.S. ports the containers are shipped to. Southwood needs 715 containers each year. It costs $1200 to hold a container at its distribution center, and it costs $6000 to receive an order for the containers. Determine the optimal order size, min- imum total annual inventory cost, number of annual orders, and time between orders.
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