$($LO $1-1)1-26.$ Supply Chain and Supply Chain Costs

Marquette Company manufactures and sells kits that homeowners can buy and assemble into office and home furniture.

Marquette and one of its customers, Goulburn Furnishings, have a dispute about inventory. Goulburn orders $100,000$ units annually of one of the desk models sold by Marquette. Because demand fluctuates, Goulburn wants Marquette to keep a six$-$week inventory for unexpected demand. Marquette operates with a zero$-$inventory policy as a way of remaining competitive, though it has never been able to completely avoid holding inventory.

After an analysis of costs, you determine that inventory storage costs per kit are $$25$ at Marquette and $$10$ at Goulburn.

Required

How do you suggest the two companies settle their dispute?