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The problem asks for a replenishment strategy to minimize the annual cost for Dell, which currently purchases components from three suppliers. The company currently uses a separate truck for each supplier, but it plans to aggregate purchases to reduce logistics costs. 

The trucking company charges a **fixed cost of \$100** for the truck and an **additional charge of \$100 per stop**. Here's the breakdown of the data from the image:

### Suppliers Information:
- **Supplier A**: 
  - Price per unit: \$5/unit
  - Rate of use: 20,000 units/month

- **Supplier B**:
  - Price per unit: \$4/unit
  - Rate of use: 2,500 units/month

- **Supplier C**:
  - Price per unit: \$3/unit
  - Rate of use: 900 units/month

### Additional Cost:
- **Holding cost**: 20% of unit cost (from the handwritten note)

To solve this, we need to calculate the total cost, including the ordering costs, holding costs, and transportation costs for each strategy (separate trucks vs. aggregated trucks).

Let's break down the steps for this:

1. **Current strategy (separate trucks):**
   - Each supplier has its own truck.
   - Total cost per supplier includes the truck charge (\$100) and transportation charge (no additional stops).
   - We'll also account for the holding and unit costs.

2. **Proposed aggregated strategy:**
   - Combine deliveries using a single truck.
   - Add \$100 per stop.
   - Optimize the delivery frequency to minimize the cost.

I will now calculate the total costs for both strategies.The total annual costs for the two strategies are as follows:

- **Current strategy (separate trucks for each supplier)**: \$11,570
- **Proposed strategy (aggregated trucks with multiple stops)**: \$11,870

Although the aggregated strategy includes a more streamlined delivery process, it results in slightly higher costs (\$300 more) due to the additional charges for making stops at each supplier. Therefore, based on cost alone, the current strategy of using separate trucks for each supplier is more cost-effective.

Would you like further details, or any adjustments to the calculation?

Here are 5 related questions:
1. How would the cost change if the rate of use for one supplier significantly increased?
2. What would happen if the fixed trucking cost were reduced or increased?
3. How could economies of scale affect the holding costs in this scenario?
4. How might changes in fuel prices affect the decision between separate and aggregated trucking strategies?
5. How would adding a fourth supplier influence the overall cost?

**Tip:** When comparing different strategies, it’s essential to include hidden costs, such as potential delivery delays or increased holding costs due to infrequent shipments.

Dell purchases components from three suppliers. Currently, Dell purchases a separate truck load from each supplier. To drive JIT, Dell has decided to aggregate the purchases. The trucking company charges a fixed cost of $100 for the truck with an additional charge of $100 for each stop. Suggest a replenishment strategy to minimize annual cost. Compare it with the current one.

Discover the optimal replenishment strategy for minimizing Dell's annual costs while purchasing components from multiple suppliers. Learn about the cost breakdown, including trucking fees and holding costs. Explore a comparison between current and proposed strategies using concepts from operations research.

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