Gamez for ordering+transportation to earn their business

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Reference no: EM132262242

Gamez is a chain of retail stores that specializes in racquet sports and associated apparel that remain open for 50 weeks in a year. Their most popular item is a tennis racquet for which weekly demand is normally distributed with a mean of 2000 racquets and standard deviation of 300 racquets. Gamez spends $15 per year towards holding costs for each racquet. They buy racquets from a supplier located in Canada and are considering switching to a new supplier in England. The Canadian supplier offers them a lead time of exactly 2 weeks, and ordering + Transportation cost of $5000 per order. The English supplier offers a lead time that is normally distributed with a mean of 2 weeks and standard deviation of 1 week. If the cost of each racquet is identical from both suppliers ($100) and Gamez maintains a 60% Service level policy, what is the maximum amount that the English supplier can charge Gamez for ordering+transportation to earn their business (i.e., to make them switch suppliers).

Reference no: EM132262242

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