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A company has three items in its inventory that are purchased from the same vendor and are shipped together on the same delivery truck. The
A company has three items in its inventory that are purchased from the same vendor and are shipped together on the same delivery truck. The truck has a capacity of 30,000 lb. The items are under the periodic review method of inventory control and are purchased with a single purchase order that costs $60 to prepare. The annual carrying cost is 25 percent of each item's value. Other information about the items is as follows:
A company has three items in its inventory that are purchased from the same vendor and are shipped together on the same delivery truck. The truck has capacity of 30,000 lbs. The items are under periodic review method of inventory control and are purchased with a single purchase order that costs $60 to prepare. The annual carrying cost is 25% of each items; value. Other information about the items is as follows: Item Product Value (C) Product Weight (w;) Weekly Demand Forecast, di 1 2. 3 $50/case 30 70 lb/case 60 100 100 cases 300 200 25 Due to economic considerations, the shipment size is not to exceed the truck capacity for the combined order. What size should the order quantity be for each item? (Hint: Use Goal Seek option in the Excel and the formula for optimal number of orders )
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