Business, 26.03.2020 19:13, evan67

The purchasing price per pound is $2.50 (paid only when the cotton arrives at XM’s facilities) and transportation cost by sea is $0.20 per pound. The average traveling time from PA’s facility in Brazil to XM’s facility in the United States is two weeks and it has a standard deviation of 0.5 week. The cost of placing a cotton order, by XM, is $100 and the annual holding cost XM is facing is 20 percent. For the calculation of holding cost per unit, the base includes the purchasing price and transportation cost. The company requires a 96% service level in order to curtail stockouts.

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The purchasing price per pound is $2.50 (paid only when the cotton arrives at XM’s facilities) and t...