What is Home Depot reduction in annual average inventory

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Reference no: EM132745694

Question - A large Home Depot store sells 100 fence posts on Monday, Tuesday, Wednesday, Thursday, Friday, Saturday and Sunday: 700 a week every week of the year. Currently to serve this demand (do not consider safety stock) a truck delivers 300 posts on early Monday morning and another 400 fence posts on early Thursday morning before the store opens. The regional Home Depot Center sends seven trucks twice a week (on Monday and Thursday) to the store to deliver the fence posts and a lot of other inventory.

It is proposed to change delivery to a truck every day to the store and this way 100 fence posts a day can be delivered early in the morning (6am) to the store by a truck.

Required -

1. What is Home Depot's reduction in average inventory of posts carried each night, over the week.

2. What is Home Depot's reduction in annual average inventory carrying costs of posts if it costs $20 a year to carry a post in inventory in the store?

3. What is being synchronized in this change in process?

Reference no: EM132745694

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