Vimar is an Italian company that specializes in Home Automation and Electrical Equipment, operating globally and serving

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Question:

Vimar is an Italian company that specializes in Home Automation and Electrical Equipment, operating globally and serving many international markets. Eng. Mauricio is their Area Manager for the Middle East region, including Kuwait.

Eng. Mauricio is revising the stock levels for their top four selling products in their local warehouse: 1. CCTV cameras (CC), 2. Smart Speaker (SK), 3. Intercom (IN), and 4. Power Socket (PS). The weekly demand for CC is 200 units/week with a cost of 32KD/unit, for SK it is 120 units/week at 28KD/unit, for IN 80 units/week at 43KD/unit, and for PS 300 units/week at 8KD/unit. The delivery company charges 300KD for every order in addition to 40KD for handling per product. The annual holding cost at the warehouse is 18% of the product cost.

1. Help Eng. Mauricio decide on the optimal order quantity, and report the time between orders as well as the annual Holding and Setup costs for each product.

Eng. Mauricio realized that the delivery truck can fit more products while charging the same cost per order (300KD) with the usual 40KD charge for every product. Accordingly, he is thinking of combining the four products whenever he places an order.

2. Assist Eng. Mauricio in this aggregation attempt and recommend if he should be ordering independently or jointly. Report the costs associated with both ordering strategies.

3. In case the truck has a maximum capacity of 2500 units. How will your answer to part (2) change? Report the revised ordering quantities for every product.

Due to its higher demand, Eng. Mauricio decided to order the Power Socket (PS) independently. He believes the weekly demand has a standard deviation of 20 units/week, and the supplier takes two weeks to deliver the orders.

4. Recommend the Safety Stock and RoP levels needed to make sure that 98% of the replenishment cycles do not have stock-outs.

P.S. Both Excel File and Word report should be submitted.

Note: I believe it will be 4 weeks per month (so 12* 4= 48 week per year)