In the current model, there is an integrated furniture manufacturer located in Tupelo, MS. To simplify the model, the manufacturer is assumed to produce only one type of finished product which requires only one type of raw material (. plywood). To reduce costs of buying raw materials, the manufacturer would prefer to order everything from the Asian supplier since the Asian supplier offers a much cheaper unit price. Based on our survey of several Mississippi furniture companies, they usually keep one month’s worth of inventories and order a certain amount of raw materials from Asian supplier every month. In the.
