# The manager of a car wash received a revised price list from the vendor who supplies soap, and a promise of shorter lead time for deliveries.

\$1.49 Excluding Tax

Complete Solution:

Solution Available in PDF File.

#### Specs

SKU: AT-1181 Category:

## Description

QUESTION:

The manager of a car wash received a revised price list from the vendor who supplies soap, and a promise of a shorter lead time for deliveries. Formerly the lead time was four days, but now the vendor promises a reduction of 25 percent at that time. The annual usage of soap is 4,500 gallons. The car wash is open 360 days a year. Assume that daily usage is normal and that it has a standard deviation of 2 gallons per day. The ordering cost is \$ 30 and the annual carrying cost is \$ 3 a gallon. The revised price list (cost per gallon) is shown in the following table:

Quantity _______________Unit Price

1â€“399 â€¦â€¦â€¦â€¦â€¦â€¦.â€¦â€¦â€¦â€¦\$2.00

400â€“799 â€¦â€¦â€¦â€¦.â€¦â€¦â€¦â€¦â€¦ 1.70

800+ â€¦â€¦â€¦â€¦â€¦.â€¦â€¦.â€¦â€¦â€¦. 1.62

a. What order quantity is optimal?

b What ROP is appropriate if the acceptable risk of a stockout is 1.5 percent?

## Reviews

There are no reviews yet.