Discount retailer target is considering ordering

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Reference no: EM132225351

A buyer at the discount retailer Target is considering ordering Colgate toothpaste for its stores. Demand for Colgate toothpaste is estimated to be 31,200 tubes per year. The fixed cost of an order- including administrative, transportation, and receving- is estimated to be $130 per order. The unit annual holding cost is $0.90 per unit per year. The unit purchase price is $3.00. Ordering restrictions dictate that you can only order in multiples of 100 tubes (e.g. 2200 tubes, 2300 tubes, etc.). In an effort to increase Target's order quantity, Colgate offers the following all unit quantity discount policy:

Order Quantity Unit Price

Q < 6,000 $3.00

6,000 <= Q < 10,000 $2.96

Q>= 10,000 $2.92

If Target minimizes total inventory costs (i.e. holding, setup, and material costs), what would the average flow time (in weeks) of a tube of toothpaste be? Assume a 52-week year. Round your answer to the nearest tenth of a week (e.g. 0.1, 1.6, 22.8, etc.)

Reference no: EM132225351

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