Mike checked with Rob to find out what it would take to include shipments for multiple

customers on a single load. Rob informed him that it would charge $$550$ per truck and

add $$50$ for each drop$-$off for which Golden was responsible. Thus, if Golden carried

a truck that had to make one delivery, the total charge would be $$600.$ However, if a

truck had to make four deliveries, the total charge would be $$850.$ Each pound of

chemical in the consignment cost $$1,$ and Mike had an annual holding cost of $25$

percent. Mike wanted to analyze a few different options for distribution available in

the Peoria region to decide on the optimal distribution policy. One was to aggregate

all $20$ customers into each truck going to $($Pounds per Month$)2,000,4,000,10,000$

Austin County. The other was to separate the $16$ customers into two groups with

one large, three medium, and six small customers in each group. Each group would

then be aggregated into a single truck going to Austin County. The detailed study of

the Austin County region would provide the blueprint for the distribution strategy

that Mike planned to roll out nationally.

Using the above and below Data, answer the questions below:

The Truck capacity is: $45,000$ LBS

Cost per truck is: $$600$

Consumption per Medium customer is: $4,000$ LBS

Annual Holding Cost $(H)$ is: $25$ percent $(0\mathrm{.}25)$

Consignment Cost is: $$1$

What is the annual cost of Mike's strategy of sending full truckloads to each

customer in the Austin County region to replenish consignment inventory?

Consider three different delivery options $($Hint: $1$ is Aggregate Demand$)$ and

evaluate the cost of each. What delivery option do you recommend for Mike?

Treat all customers as one group $($i$.$e$.$ a truck delivers to all customers$).$ Create

three groups consisting of customers within each class $($i$.$e$.,$ one truck delivers

to Small customers, one truck delivers to Medium customers, and one truck

delivers to Large customers$).$ Create two groups of customers where each

group consists of one Large, three Medium, and six Small.

Answer the above questions. Show your calculations and explain.