What are the holding cost parameters for both warehouse

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Case: HiFi Inc. is a retail chain that specializes in audio equipment. They operate a central warehouse and five retail stores. Consider the inventory decisions for their highly profitable private-label audio system product. The cost of the audio system is estimated to be $500. The company uses 25% annual inventory holding cost rate in the central warehouse and 50% annual holding cost rate at the retail stores. The higher inventory holding cost at the stores primarily reflects the limited retail space available relative to the warehouse storage space. HiFi's supplier consistently delivers orders in 7 days. Shipping from the central warehouse to the retail stores takes 2 days. Mean daily demand at each store is 5 units with a standard deviation of 1.5. Daily orders at the central warehouse have an average of 25 and a standard deviation of 5.

Question: What are the holding cost parameters for both warehouse and retail, lead time parameters for both, and retail store demand parameters for both?

Reference no: EM133298025

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