1. A manufacturer is considering the cost of establishing a warehouse for a market in which it currently ships all products directly to the customer. The current cost for an average direct-to-customer shipment of 1000 lbs. is $10.00 per cwt (hundredweight). The cost for volume shipments (10,000 + lbs.) to the market warehouse is $2.00 per cwt, and the cost for local delivery within the market from the warehouse is $4.00 per cwt. Can the manufacturer justify the use of a warehouse in this situation? Please show all work to arrive at your decision.

Assumptions and alternatives are summarized below:

Manufacturer direct ship to customer

Average shipment = 1000 lbs

Freight rate to customer = $10.00 per cwt

OR

Ship to warehouse market at:Volume transport rate = $2.00 per cwt

For shipments 10,000+ lbs

Local delivery within market = $4.00 per cwt

3. A firms existing safety stock inventory is 100 units in a three (3) facility network. What will the future safety stock inventory be if the firms network is expanded to six (6) facilities? SHOW ALL WORK.