CT$866$: Supply Network Design & Inventory Management

$28$ January $2024$

Quiz $1($Duration $40$ minutes$)$

Total marks: $140$

NAME:

$($a$)$ A Singapore$-$based Telecom company buys hand$-$phones from its contract manufacturer located in Taiwan to serve the regional market which is served from a warehouse in Penang, Malaysia. Daily demand at the warehouse is normally distributed, with a mean of $500$ units and a standard deviation of $100.$ The warehouse aims for a CSL of $98$ per cent.

The company is trying to decide whether to use sea transportation or air transportation from Taiwan. Sea transportation results in a lead time of $14$ days and costs $$0\mathrm{.}50$ per phone; air transportation results in a lead time of $3$ days and costs $$2\mathrm{.}50$ per phone.

Each phone costs $$200,$ and the telco uses an annual holding cost rate of $25$ per cent. The telco would order $15,000$ phones $($on average$)$ once every $30$ days if using sea transport and $500$ phones $($on average$)$ daily if using air transport.

Which mode of transport should the company use considering it owns the inventory in$-$transit?

$(Total20$ marks$)$

$(1)$

Answer: