
Practical Management Science
6th Edition
ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
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Transcribed Image Text:When Vidalia onions are ready, the entire 13 county (plus parts of seven other counties) area in
Georgia where they are grown is devoted to the harvest, packaging and shipping of this delicacy.
The Onion Shack currently purchases 120,000 bags of onions each year at a price of $100 per
bag (a bag is ten pounds). Onion Shack has historically purchased in lots of 3000 bags. Transit
time and capacity vary as indicated in the table. The safety inventory that Onion Shack requires
is 30% of lead time demand and the holding cost for a bag is 15% of cost.
Carrier
Mashburn Rail
Sylvia Express
Anita Enterprises
Smith Trucking
Quantity
Shipped (cwt)
200+
100+
250+
250+
B) $2004.60
C) $1972.60
D) $1864.60
Quantity shipped Shipping cost Transit time
(S/cwt)
(days)
$2.10
5
3
3
3
(bags)
2000+
1000+
2500+
2500+
$2.35
$1.35
$1.00
5. Use Scenario 14.1 to determine the in-transit inventory cost of the Anita Enterprises option if
the Onion Shack purchases 240,000 bags of Vidalia onions each year.
A) $1936.60
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