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Office Outlet, a small chain of 7 office supply stores, carries a variety of office-oriented products,...

Office Outlet, a small chain of 7 office supply stores, carries a variety of office-oriented products, including paper, printer cartridges, shipping materials, etc. The owner of the chain wants to reduce inventory levels by requiring suppliers to deliver more frequently. One particularly fast-moving product, standard printer paper, is currently delivered to the stores every two weeks (stores operate 7 days a week). Order size varies, but averages 560 boxes (10 reams to a box) to each store. The paper vendor sells the boxes to Office Outlet at $23.00 per box.

1. What is the average level of inventory at a single store? Across the chain?

2. If Office Outlet can negotiate deliveries to occur every other day (would go from 1 delivery to 7 during the 2 week period), what happens to the average inventory level per store and across the chain?

3. Across the chain, how much money does the change free up?

4. What other benefits will the company obtain from increasing the order frequency?

5. What negative consequences will the company incur by increasing the order frequency? List several specific ways the company can address these issues.

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