Answered: What is the optimal order frequency, if…

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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company sources from hundreds of suppliers and is considering the aggregation of inbound shipments to lower costs. The company decides to aggregate three suppliers per truck. The common truckload shipping order cost, S = $2020 per truck,

along with supplier-specific order costs, s1 = $114, s2 = $90, s3 = $100 per pickup.

Average annual demand from each supplier is, demand per product, D1 = 9160, D2 = 10216, D3=18466 units.

Each unit cost per product is, C1 = $98, C2 = $87, C2 = $20, and the company incurs a holding cost of 19 percent.

What is the optimal order frequency, if the company decides to aggregate three suppliers per truck?

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