Question: Jane needs help with inventory planning. In particular, she has two options in mind. The first option will consist of holding final product inventory for

Jane needs help with inventory planning. In particular, she has two options in mind. The first option will consist of holding final product inventory for all 40 of the product configurations. She likes this option because she would be able to immediately ship products to customers. The second option would consist of holding inventory of the five product colors, and printing the university logos herself before shipment to customers. She likes this option because it simplifies inventory requirements.
For this assignment, create an Excel spreadsheet to evaluate the two options. The comparison should compare: (a) the annual holding cost of safety stock for the no aggregation option, where all 40 final product configurations are held in inventory, and (b) the annual holding cost of safety stock plus the increased printing cost for the aggregation option, where inventory is held by color so that only 5 different items are held in inventory. When analyzing the two alternatives, use a target product fill rate of 99%.
After explaining inventory holding costs to Jane, you agree to use an annual holding rate of 50% for your analysis because Jane will need to rent warehouse space. However, this value is uncertain. So, you agree to use a graphical display to show her how the options compare if the annual holding rate is changed from 15% to 65%(with increments of 5%).

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related General Management Questions!