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Walmart sells 2,000 units of home goods each month. Each unit costs $40 and Walmart has an annual holding cost of 25 percent. Placing a replenishment order incurs clerical costs of $300/order.

Assume that the shipping company charges $900 as a fixed cost per shipment

A) What is the optimal order size?

B) What is the annual total cost of the optimal policy ( annual clerical costs + annual transportation cost + annual holding cost) ?

Assume that the shipping company charges a variable cost of $0.10 per unit shipped.

C) What is optimal order size?

D) What is the annual total cost of the optimal policy ( annual clerical costs + annual transportation cost + annual holding cost )?

Operation Management, Management Studies

  • Category:- Operation Management
  • Reference No.:- M93128332

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