At The Fresh Connection, the supply chain manager, has just chosen to change all of the stock levels for finished goods. This is in an attempt to improve service levels to customers. He has set a new safety stock and production interval for all finished products. As the operations manager, it is your task to find out how much space you need in your finished goods warehouse. In an effort to simplify the system, the supply chain manager has set the safety stocks for all 6 finished goods to 3 weeks and the production interval of all finished goods to 1 weeks (or 5 days). The production interval is the time between production runs of a given product. At The Fresh Connection, you measure stocks in terms of weeks of demand. Currently you can store 600 units of 1 liter cartons on a pallet and 1440 units of 0.3 liter PET bottles on a pallet. Your average weekly demand for all the products combined, in 1 liter cartons is 155000. This means that the sum of all one liter products that flow through your finished goods warehouse in a given week averages out to be 155000. Similarly, your average weekly demand for products in .03 liter PET bottles is 200000.For simplicity, you start by assuming that all products are made instantaneously and all arrive in your warehouse at the same time. You also assume that there is no variation in your output from your warehouse. Under these assumptions, you have a standard fixed order quantity model with no lead time and perfectly stable demand. What is the average number of pallets that you will have in your finished goods warehouse? Show your calculations.
At The Fresh Connection, the
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