[solved]-Problem 1 Wine Distributor Tries Reset Ordering Policy One Top Sellers Demand Stationary 2 Q39702347

Problem 1 A wine distributor tries to reset the ordering policy of one of the top sellers. The demand is stationary: about 20 bottles a day. Past sales data shows that there is no seasonality in his demand and the market share is very stable. The purchase cost of the wine is $15 per bottle. The cost associated inventory, including cost of capital, insurance, and facility maintenance cost, is 4% of the dollar value of inventory per week. $80 is charged to the distributor as a order, regardless of order quantity delivery cost per a) What is variable order cost, fixed order cost, and inventory holding cost per cycle when Q bottles are ordered? b) Can the wine distributor use EOQ to determine optimal order quantity which minimizes total cost? Why or why not? c) What is optimal order quantity based on EOQ? What is associated average cost per week? d) What are the inventory turns a week with EOQ? e) In fact, the wines are delivered in a box where each box has 24 bottles and the distributor can only order wines in boxes. How many boxes of the wine should be ordered? What is associated average cost per week? f) The wine producer offered a deal: if the distributor orders 10 or more boxes, he will give 15% discount for entire purchase. However, delivery cost will be the same. Will you take the offer? How many boxes will you order considering the offer? Show transcribed image text Problem 1 A wine distributor tries to reset the ordering policy of one of the top sellers. The demand is stationary: about 20 bottles a day. Past sales data shows that there is no seasonality in his demand and the market share is very stable. The purchase cost of the wine is $15 per bottle. The cost associated inventory, including cost of capital, insurance, and facility maintenance cost, is 4% of the dollar value of inventory per week. $80 is charged to the distributor as a order, regardless of order quantity delivery cost per a) What is variable order cost, fixed order cost, and inventory holding cost per cycle when Q bottles are ordered? b) Can the wine distributor use EOQ to determine optimal order quantity which minimizes total cost? Why or why not? c) What is optimal order quantity based on EOQ? What is associated average cost per week? d) What are the inventory turns a week with EOQ? e) In fact, the wines are delivered in a box where each box has 24 bottles and the distributor can only order wines in boxes. How many boxes of the wine should be ordered? What is associated average cost per week? f) The wine producer offered a deal: if the distributor orders 10 or more boxes, he will give 15% discount for entire purchase. However, delivery cost will be the same. Will you take the offer? How many boxes will you order considering the offer?

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Answer to Problem 1 A wine distributor tries to reset the ordering policy of one of the top sellers. The demand is stationary: abo… . . .