Answered: Determine SLC Walmart’s Economic Order Quantity in [gallons]. 2. If SLC Walmart buys 750 gallons of coconut water per order, what is the average flow time of…

Name: The demand for coconut water at SLC Walmart is 600 gallons per week. T
Uploaded: 2024-03-20T06:57:05.000Z
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Description: The demand for coconut water at SLC Walmart is 600 gallons per week. The setup cost for placing an order to replenish inventory is $25. Coconut water loses its freshness when stored, and SLC Walmart incurs an annual holding cost of $2.6/gallon. Assum

Practical Management Science

6th Edition

ISBN: 9781337406659

Author: WINSTON, Wayne L.

Publisher: Cengage,

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Question

The demand for coconut water at SLC Walmart is 600 gallons per week. The setup cost for placing an order to replenish inventory is $25. Coconut water loses its freshness when stored, and SLC Walmart incurs an annual holding cost of $2.6/gallon. Assume that there are 52 weeks a year.

1. Determine SLC Walmart’s Economic Order Quantity in [gallons].

2. If SLC Walmart buys 750 gallons of coconut water per order, what is the average flow time of coconut water at SLC Walmart?

(Hint: First find the average inventory (I). Then use Little’s Law to find the flow time (T) in weeks. Note that the flow rate (R) is 600 [gallons/week].)

3. What is the optimal weekly cost of ordering and holding?

Expert Solution

Step 1: Introduce the question:

$L e t space m e space s t a t e space t h e space g i v e n space d a t a comma space A n n u a l space d e m a n d equals left parenthesis 600 cross times 52 right parenthesis space A n n u a l space d e m a n d equals 31200 T h e space s e t u p space cos t space p e r space o r d e r space equals space 25 A n n u a l space h o l d i n g space cos t space p e r space g a l l o n equals 2.6$

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