Ruby-Star Incorporated is considering two different vendors for one of its top-selling products which has an average weekly demand of60units and is valued at$60per unit. Inbound shipments from vendor 1 will average370units with an average lead time (including ordering delays and transit time) of5weeks. Inbound shipments from vendor 2 will average520units with an average lead time of1week.Ruby-Star operates 52 weeks per year; it carries a5-weeksupply of inventory as safety stock and no anticipation inventory.a. What would be the average aggregate inventory value of this product if Ruby-Star used vendor 1 exclusively?b. What would be the average aggregate inventory value of this product if Ruby-Star used vendor 2 exclusively?c. How would your analysis change if average weekly demand increased to 100 units per week?

Average aggregate inventory value = (Number of units on hand) × (Value of each unit)

Answered: Ruby-Star Incorporated is considering…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Ruby-Star Incorporated is considering two different vendors for one of its top-selling products which has an average weekly demand of

units and is valued at

$60

per unit. Inbound shipments from vendor 1 will average

370

units with an average lead time (including ordering delays and transit time) of

weeks. Inbound shipments from vendor 2 will average

520

units with an average lead time of

week.

Ruby-Star operates 52 weeks per year; it carries a

5-week

supply of inventory as safety stock and no anticipation inventory.

a. What would be the average aggregate inventory value of this product if Ruby-Star used vendor 1 exclusively?
b. What would be the average aggregate inventory value of this product if Ruby-Star used vendor 2 exclusively?
c. How would your analysis change if average weekly demand increased to 100 units per week?

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