Question 3: A coat manufacturer is considering the possibility of replacing the three retailers with a single large DC (centralized option). Each retailer covers a specific demand following normal distribution in Table 2. They also consider the lead time for replenishment is 2 weeks and the ordering cost is $40. Assume that the demand in the central DC is the sum of the demand across all three areas. The company is targeting a CSL of 0.90. Assume that any pair of outlets' demand is independently correlated (Py = 0), %3D the holding cost h = $0.5 per unit/week Table 2. Demand distribution of three retailers Retailer Mean demand, D (units/week) Std, D R1 70 R2 50 10 R3 80 10 а. Calculate average inventory of each market for the decentralized option? b. Calculate average inventory for the centralized option? с. What are the impacts of centralized options based on average inventory?
Question 3: A coat manufacturer is considering the possibility of replacing the three retailers with a single large DC (centralized option). Each retailer covers a specific demand following normal distribution in Table 2. They also consider the lead time for replenishment is 2 weeks and the ordering cost is $40. Assume that the demand in the central DC is the sum of the demand across all three areas. The company is targeting a CSL of 0.90. Assume that any pair of outlets' demand is independently correlated (Py = 0), %3D the holding cost h = $0.5 per unit/week Table 2. Demand distribution of three retailers Retailer Mean demand, D (units/week) Std, D R1 70 R2 50 10 R3 80 10 а. Calculate average inventory of each market for the decentralized option? b. Calculate average inventory for the centralized option? с. What are the impacts of centralized options based on average inventory?
Purchasing and Supply Chain Management
6th Edition
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Chapter16: Lean Supply Chain Management
Section: Chapter Questions
Problem 10DQ: The chapter presented various approaches for the control of inventory investment. Discuss three...
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