What is the average inventory for direct shipping case

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Problem

A retail chain operates six stores in a region, each supported by 2 supply sources. The trucks used for distribution have a capacity of 30,000 units and incur a fixed transportation cost of $1,000 per load, with an additional $100 charge per delivery stop. This means a truck making two deliveries would charge $1,200. The cost of holding one unit of inventory at the retail stores for a year is $0.50 per unit. Given the fluctuating demand patterns, the Vice President of Supply Chain is contemplating whether direct shipping or setting up milk runs from suppliers to retail stores would be more efficient. Get the instant assignment help. The decision needs to cater to different demand scenarios. Each store has annual sales of a high demand product totaling 900,000 units. What is the average inventory for direct shipping case?

Reference no: EM133986861

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