Wines In Cans (WIC) sells wine in cans. The firm is located near a winery in the Bordeaux area, and receives the wine directly from the winery. The demand for the canned wine is very stable at 200 cans per week. WIC orders every two weeks, when the wine inventory is empty. The winery immediately (almost zero lead time) replenishes WIC's inventory with cans filled with wine. The fixed delivery cost per order is about $50.
[5 pts] How many cans does the firm order every two weeks? Under the current practice, what is the re-order point of WIC?
Answer: The firm orders __________cans every two weeks. The ROP = .......... cans.
What is the average time a can spends in WIC, from the moment it arrives from winery until it is purchased.
Answer: A can on average spends _____week(s) in WIC inventory.
[10pts] The winery is concerned by how long its wine sits at WIC inventory before it is purchased by customers because it believes that the delay is detrimental to the quality of the wine. It would like WIC to order smaller batches and order more frequently. The winery has offered to reduce the delivery cost to $25 per order. Do you think WIC should consider reducing the order size?
Circle one: Yes! No!