Question

55.9 million gallons are consumed each day during normal conditions. A simplified version of the gasoline supply chain is shown in the figure below.The customer goes to a local retail store and buys gasoline. The retail store immediately knows the demand and the gasoline is given to the customer. So, there are 0 days needed for the order to get to the retail store and 0 days needed to move the goods. It is almost instantaneous. At the end of the day the Local Retail shop calculates their daily usage and submits an order to the Regional Distribution Center who will take a day to process the order and then it will take 3 days for the order to make it to the Local Retail Store. Similarly, the Regional Distribution Centers will determine their orders submit it to the Refineries who will take 2 days to process the order and 14 days to ship the gasoline to the Regional Distribution Center. Based on the gasoline supply chain case study, when will the first larger shipments of fuel arrive at the Regional Distribution Centers if everyone orders as soon as they see an increase in demand? Case study is before the question

Options:

Day 12

Day 17

Day 14

Day 18

Answer 1

According to the question,

The local retail shop calculates the overall demand at the end of the day and then places an order with the Regional Distribution Center.

Now the regional distribution center collects all order details and places an order with the Refineries.

The refineries will take two (2) days to process the order and then 14 days it will take in shipping and reaching the regional distribution center.

If the retailer gets to know an increase in demand hence it will place an order at the end of day 0. Hence it took one (1) day for the retailer to place the order after knowing an increase in demand.

Now the Regional Distribution Center will place the order at the end of same day after knowing the increase in demand from each and every retail store.

Now the order will take 2 days to be processed and 14 days to reach.

Hence from the order from the Regional Distribution Center to reach at the distribution center it will take 2+14 (2 days for order processing and 14 days for shipment) = 16 days.

Now the order demand determination from the retailer hand will take 1 day, and 1 day will be taken by the distribution center to process and determine the order increase rate.

Hence it will take a total of 16+1+1 = 18 days for the order to reach the regional distribution center.

IF YOU LIKE THE ANSWER, PLEASE GIVE AN UP-VOTE OR THUMB UP. THIS WILL ENCOURAGE ME TO ANSWER MORE!!