A retail chain has eight stores in a region supplied from four supply sources. Trucks have a capacity of 40,000 units and cost $1,000 per load plus $100 per delivery. Thus, a truck making two deliveries charges $1,200. The cost of holding one unit in inventory at retail for a year is $0.20. The vice president of supply chain is considering whether to use direct shipping from suppliers to retail stores or setting up milk runs from suppliers to retail stores.

What network do you recommend if annual sales for each product at each retail store are 960,000 units (suppliers make different products)?

What network do you recommend if sales for each product at each retail store are 120,000 units? Assume full truckload shipments and for the milk run there are two stores on each truck.

Calculate total cost for D=120000 under the following conditions: a)direct network b)Milk run of 2 c)milk run of 4