Question

Mary’s Flower Boutique needs to ship finished goods from its manufacturing facility to its distribution warehouse. Annual demand for the Flower Boutique is 2000 flowers. Flower Boutique can ship the flowers via regular parcel service (3 days transit time), premium parcel service (1 day transit time), or via public carrier (5 days transit time). What is the average annual transportation inventory for each alternative? answer

Answer 1

Answer: The calculation is as follows:

Explanation:

Given that,

Annual demand = 2000 flowers

Regular parcel service = 3 days transit time

Premium parcel service = 1 day transit time

Public carrier = 5 days transit time

(1) Average annual transportation inventory for Regular parcel service:

⇒ $\frac{Annual\ demand\ \times\ Regular\ Service}{365}$

= $\frac{2000 \times\ 3}{365}$

= 16.43

(2) Average annual transportation inventory for Premium parcel service:

⇒ $\frac{Annual\ demand\ \times\ Premium\ Service}{365}$

= $\frac{2000 \times\ 1}{365}$

= 5.47

(3) Average annual transportation inventory for Public carrier:

⇒ $\frac{Annual\ demand\ \times\ Public\ carrier}{365}$

= $\frac{2000 \times\ 5}{365}$

= 27.39