Consider the following two-echelon inventory system. There are two depots at the lower echelon and one distribution center at the upper echelon. Demand is deterministic with a constant rate. Backordering is not allowed. Consider the following parameter setting:
|
Location
|
Demand per week
|
Cycle time
|
Holding cost
|
Replenishment cost per order
|
|
Distribution center
|
|
4 weeks and 2 weeks alternating
|
0.5/unit
|
10
|
|
Depot 1
|
4
|
2 weeks
|
2/unit
|
16
|
|
Depot 2
|
1
|
3 weeks
|
1/unit
|
4.5
|
What is the cost incurred per unit time for this inventory system? Be careful with the "system inventory" level for depot 1 and depot 2. It may not have the zero inventory property.