Fliboard Fliboard uses continuous review policy Lot size is calculated using economic order quantity (EOQ) Now Fliboard decides to use Samsung battery for both hoverboards so that demands of batteries can be aggregated Target CSL Samsung battery: 0.99 Replenishment lead time Samsung battery: 4 weeks Fixed order cost Samsung battery: $1,000 per order Inventory holding cost of battery Samsung battery: $60 (Source) http://urbanview.ng/2016/04/15/the-hoverboard-craze/ 13 Question 3 Calculate following values for replenishing battery (3-1) Lot size (Q) For Samsung battery (3-2) Safety inventory (ss) For Samsung battery (3-3) Annual ordering cost (AOC) For Samsung battery (3-4) Annual holding cost (AHC) For Samsung battery (3-5) Annual material cost including battery (AMC) For Proboard For Babyboard (cost increases due to using Samsung battery) (Source) http://www.gettyimages.com/detailews-photo/boy-rides-a-hoverboard-on-the-day-after-christmas-in-san-news-photo/502561434 14 Question 3 Calculate total profit of the current operation (two hoverboards) Assume annual ordering cost and holding cost of all components except batteries are negligible Thus, we only need to consider costs AOC, AHC, and AMC in (3-3), (3-4) and (3-5) for calculating profit (3-6) Total profit Profit = Revenue Total Cost Where total cost is sum of: Annual material cost Annual ordering cost Annual holding cost

Fliboard Question 3 Fliboard uses continuous review policy - Lot size is calculated using economic order quantity (EOQ) Now Fliboard decides to use Samsung battery for both hoverboards so that demands of batteries can be aggregated Target CSL - Samsung battery: 0.99 Replenishment lead time - Samsung battery: 4 weeks Fixed order cost - Samsung battery: $1,000 per order Inventory holding cost of battery - Samsung battery: $60 why Calculate following values for replenishing battery - (3-1) Lot size (0) For Samsung battery - (3-2) Safety inventory (ss) For Samsung battery -(3-3) Annual ordering cost (AOC) For Samsung battery - (3-4) Annual holding cost (AHC) For Samsung battery - (3-5) Annual material cost including battery (AMC) For Proboard For Babyboard (cost increases due to using Samsung battery) LARS LOVIMA Question 3 Comparison Calculate total profit of the current operation (two hoverboards) - Assume annual ordering cost and holding cost of all components except batteries are negligible Thus, we only need to consider costs AOC, AHC, and AMC in (3-3), (3-4) and (3-5) for calculating profit - (3-6) Total profit . Profit - Revenue - Total Cost Where total cost is sum of: - Annual material cost - Annual ordering cost - Annual holding cost Fliboard Question 3 Fliboard uses continuous review policy - Lot size is calculated using economic order quantity (EOQ) Now Fliboard decides to use Samsung battery for both hoverboards so that demands of batteries can be aggregated Target CSL - Samsung battery: 0.99 Replenishment lead time - Samsung battery: 4 weeks Fixed order cost - Samsung battery: $1,000 per order Inventory holding cost of battery - Samsung battery: $60 why Calculate following values for replenishing battery - (3-1) Lot size (0) For Samsung battery - (3-2) Safety inventory (ss) For Samsung battery -(3-3) Annual ordering cost (AOC) For Samsung battery - (3-4) Annual holding cost (AHC) For Samsung battery - (3-5) Annual material cost including battery (AMC) For Proboard For Babyboard (cost increases due to using Samsung battery) LARS LOVIMA Question 3 Comparison Calculate total profit of the current operation (two hoverboards) - Assume annual ordering cost and holding cost of all components except batteries are negligible Thus, we only need to consider costs AOC, AHC, and AMC in (3-3), (3-4) and (3-5) for calculating profit - (3-6) Total profit . Profit - Revenue - Total Cost Where total cost is sum of: - Annual material cost - Annual ordering cost - Annual holding cost