LLBean orders a supply of its house brand hiking boots when stock on hand drops to a given level at its shipping warehouse. Each Bean warehouse has the following profile for this product line: Table 1 Demand forecast (weekly) o demand forecast 2000 units 600 units/week 97% Desired cycle service level Supplier lead time (fixed) | Average Cost | Average Retail Price Shipping cost per order | financial & physical carry cost rate (h) 4 weeks $40 $59.99 $1000 10% a. Assume that LL Bean is considering a move to consolidate four of its regional warehouses (each identical in profile to that described above) into two centralized DCs. Report the potential inventory holdin and ordering cost savings from this move for the one item if Bean operates 50 weeks per year. Also, report any order response improvement you observe from the new plan. b. Assuming this plan is executed properly, per unit transportation shipping costs will increase from $1 per unit to $1.08 per unit. Report your analysis and recommend a final plan of action for LL. Bean.

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
icon
Related questions
Question

How do i do question 1

1.
LLBean orders a supply of its house brand hiking boots when stock on hand drops to a given level at its
shipping warehouse. Each Bean warehouse has the following profile for this product line:
Table 1
Demand forecast
| (weekly)
o demand forecast
2000 units
600
units/week
97%
Desired cycle service
level
Supplier lead time
| (fixed)
Average Cost
Average Retail Price
Shipping cost per order
financial & physical
carry cost rate (h)
4 weeks
$40
$59.99
$1000
10%
a. Assume that LL Bean is considering a move to consolidate four of its regional warehouses (each
identical in profile to that described above) into two centralized DCs. Report the potential inventory holding
and ordering cost savings from this move for the one item if Bean operates 50 weeks per year. Also, report
any order response improvement you observe from the new plan.
b. Assuming this plan is executed properly, per unit transportation shipping costs will increase from
$1 per unit to $1.08 per unit. Report your analysis and recommend a final plan of action for LL. Bean.
Transcribed Image Text:1. LLBean orders a supply of its house brand hiking boots when stock on hand drops to a given level at its shipping warehouse. Each Bean warehouse has the following profile for this product line: Table 1 Demand forecast | (weekly) o demand forecast 2000 units 600 units/week 97% Desired cycle service level Supplier lead time | (fixed) Average Cost Average Retail Price Shipping cost per order financial & physical carry cost rate (h) 4 weeks $40 $59.99 $1000 10% a. Assume that LL Bean is considering a move to consolidate four of its regional warehouses (each identical in profile to that described above) into two centralized DCs. Report the potential inventory holding and ordering cost savings from this move for the one item if Bean operates 50 weeks per year. Also, report any order response improvement you observe from the new plan. b. Assuming this plan is executed properly, per unit transportation shipping costs will increase from $1 per unit to $1.08 per unit. Report your analysis and recommend a final plan of action for LL. Bean.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 5 steps with 1 images

Blurred answer
Knowledge Booster
Economic Variables
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education