Fans-and-More, Inc. assemble controllers for ceiling fans. Exhibit 13.16 provides information on a plastic case for fan infrared controllers produced by one of their suppliers, Byannan, Inc. The plastic case is made using injection molding machines. Byannan requires a minimum order quantity of 100,000 units. The supply chain is assumed to operate 250 days a year. 

a. Use the Total Supply Chain Cost Excel template to find the total supply chain cost.

b. Due to political and loading dock unrest in Byannan’s home country, you must decide whether to increase order sizes and carry more inventory to support fan sales. A fan with no controller is not a sellable stock-keeping-unit. What order size is best? What do you recommend Fans-and-More do?

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EXHIBIT 13.16 Supply Chain Costs for Fan-and-More, Inc. Oversight Cost per Unit (0) $0.06 Annual Demand (D) 1,500,000 Price per Unit (P) $0.86 Transport Cost per Unit (C₂) $0.11 Order Cost (C) $315 Cost to Store One Unit One Year (C₂) $0.32 Oder Lead Time in Days (L) 120