Question
A company uses a product that must be delivered by special trucks. As such, ordering (and delivery) costs are relatively high, at $3,600 per order.
A company uses a product that must be delivered by special trucks. As such, ordering (and delivery) costs are relatively high, at $3,600 per order. The product is packaged in four-liter containers. The cost of holding the product in storage is $90 per four-liter container per year. The annual demand for the product, which is constant over time, is 3,000 four-liter containers per year. The lead time from order placement to receipt is 16 days. The company operates 320 working days per year. Compute the optimal order quantity, the total minimum inventory cost, and the reorder point.
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