5. [22 points] GatorMove is a company that provides 3PL ship…
5. [22 points] GatorMove is a company that provides 3PL shipping service for GreenSeeds. GatorMove makes deliveries from GreenSeeds’ manufacturing plant to its central warehouse. Based on the historical performance, transportation lead time provided by GatorMove is normally distributed with a mean of 5 days and a standard deviation of 2 days. Currently, GatorMove charges GreenSeeds $1/unit for shipping cost. GreenSeeds use the EOQ model to determine its optimal quantity per shipment. Other relevant information can be found below: Average demand at the warehouse 150 units/day The standard deviation of daily demand at the warehouse 20 units/day Fixed ordering cost $ 250/order Unit cost $ 40/unit In-transit inventory carrying rate 15% On-site inventory carrying rate 20% Probability of not stocking out during lead time 90% Operating days at the warehouse 360 days/year What is the total annual logistics cost (including transportation, on-site inventory, and in-transit inventory holding) associated with the current system?
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