Solution-Minimizes the total supply chain costs

Minimizes the total supply chain costs

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Reference no: EM13314570

Crunchy, a cereal manufacturer has dedicated a plant for one major retail chain. Sales at the retail chain average about 20,000 boxes a month and production at the plant keeps pace with this average demand. Each box of cereal costs Crunchy $3 and is sold to the retailer at wholesale price $5. Both Crunchy and the retailer use a holding cost of 20 percent. For each order placed, the retailer incurs an ordering cost of $200 per order placed. Crunchy incurs the cost of transportation and loading that totals $1,000 per order shipped.

Given that it is trying to minimize its ordering and holding cost, what lot size will the retailer ask for in each order? What is the annual ordering and holding cost for the retailer as a result of this policy?

(B)What is the annual delivery cost and holding cost for Crunchy as a result of this policy? What is the total supply chain cost as a result of this policy?

(C)What quantity discount price results in the retailer ordering the quantity that minimizes the total supply chain costs?

Reference no: EM13314570

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Minimizes the total supply chain costs

Reference no: EM13314570

Reference no: EM13314570

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