On-line retailer of prescription drugs and health supplement

Assignment Help Operation Management

Reference no: EM132197874

CTC is an on-line retailer of prescription drugs and health supplements. Vitamin-C represents a significant percentage of its sales. Demand for Vitamin-C is 15000 bottles per year. CTC incurs a fixed order placement, transportation, and receiving cost of $160 each time an order for Vitamin-C is placed with the manufacturer. CTC incurs a holding cost of 25 percent. The price charged by the manufacturer is $4/bottle. Each time CTC places an order, the manufacturer has to process, pack, and ship the order. The manufacturer has a line packing bottles at a steady rate and does not keep any inventory. The fixed cost of filling each order is $450 for manufacturer.

Part One

a) What is CTC’s EOQ?

b) What is CTC’s total annual cost (ordering and holding) under CTC’s EOQ?

c) What is the Manufacturer’s total annual cost under the CTC’s EOQ policy?

d) What is the total annual ordering and holding cost for this supply chain under CTC’s EOQ policy?

Part Two

a) What is EOQ for this supply chain?

b) What is the CTC’s annual ordering and holding cost under this supply chain EOQ?

c) What is the Manufacturer’s annual ordering cost and holding cost under this supply chain EOQ?

d) What is the supply chain total cost under this supply chain EOQ?

e) Compare the supply chain total cost between Part One and Part Two. Discuss your observation

Reference no: EM132197874

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