Problem in Supply Chain 1 answer below »

Problem 2. Dominic's supermarket chain sells Nut Flakes, a popular cereal manufactured by the

Tastee cereal company. Demand for Nut Flakes is 1,000 boxes per week. Dominick's has a

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holding cost of 25 percent and incurs a fixed trucking cost of $200 for each replenishment order it

places with Tastee.

(a) Given that Tastee normally charges $2 per box of Nut Flakes, how much should

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Dominick's order in each replenishment lot?

(b) Tastee runs a trade promotion, lowering the price of Nut Flakes to $1.80 for a month.

How much should Dominick's order be, given the short-term price reduction?

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