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Question: Top Oil, a refiner in Indiana, serves 3 customers near Nashville, Tennessee, and maintains consignment inventory (owned by TopOil) at each location. Currently, TopOil uses truck load (TL) transportation mode to deliver separately to each customer. Each truck costs $800 plus $250 per stop. Thus, delivering to each customer separately costs $1,050 per truck. TopOil is considering aggregating deliveries to Nashville on a single truck. Demand at the large customer is 60 tons/year, at medium is 24 tons/year, and small is 8 tons/year. Product cost for TopOil is $10,000 per ton and it uses a holding cost of 25%. Truck capacity is 12 tons. Derive a tailored policy, and indicate the corresponding costs and inventories.
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