Question

A clothing manufacturer has a factory at a low-cost location and needs to ship finished clothing to retail locations. The annual "demand" for a particular high-priced dress is 2,400 per year at one retail location. The manufacturer has the choice of shipping the products from the factory to the retail location by a private ground transportation which will take 3 days, by air with the same private company which will take 1 day or by using a public transportation company which will take 7 days. What will be the average transportation inventory for each option? Assume 300 working days per year.

Answer 1

The average transportation inventory for each option is 8 units for private ground and air transportation, and 1.14 units for public transportation.

Step-by-step explanation:

To calculate the average transportation inventory for each option, we need to consider the lead time for each transportation method. The lead time is the time it takes for the finished clothing to reach the retail location from the factory. Let's calculate the average transportation inventory for each option Private ground transportation The lead time is 3 days, so the average transportation inventory is 2,400 units / (300 working days per year * 3 days) = 8 units.Air transportation The lead time is 1 day, so the average transportation inventory is 2,400 units / (300 working days per year * 1 day) = 8 units.Public transportation The lead time is 7 days, so the average transportation inventory is 2,400 units / (300 working days per year * 7 days) = 1.14 units.Therefore, the average transportation inventory for each option is 8 units for private ground and air transportation, and 1.14 units for public transportation.