M/s Excellent Dashboard Private LTD. (EDPL) is situated at Gurgaon near Delhi. The company supplies dashboard...

  

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M/s Excellent Dashboard Private LTD. (EDPL) is situated at Gurgaon near Delhi. The company supplies dashboard assembly as a 4PL supplier to Maruti Udyog LTD (MUL) since past 3 years. There are number of components in the dashboard like speedometer, level gauge, etc. EDPL purchase these individual components from various suppliers and assembles them at their works for onward supply to MUL. One of the major components namely "Starter Switch" is always the problem. Since the EDPL does not observe any Systematic Inventory Control methods in their purchasing activities, they just order the quantity as and when the demand arises. As this product is not available off the shelf, many a times delays occur in arranging for assembled to MUL. This in turn, results into a financial loss to EDPL due to penalties imposed by MUL as per the agreement, towards delays in supply of dashboard assembly. The information gathered from EDPL shows that the annual demand of the item, Starter Switch is 5000 nos. The unit price of the item is Rs.50 each. The inventory carrying cost and ordering cost is 20% and Rs. 40 per order respectively. a) Explain the role of fourth party Logistics in the above case. b) How EDPL can avoid financial penalties imposed by MUL? c) Calculate Economic Order Quantity (EOQ) for the item under reference, by using the available information. M/s Excellent Dashboard Private LTD. (EDPL) is situated at Gurgaon near Delhi. The company supplies dashboard assembly as a 4PL supplier to Maruti Udyog LTD (MUL) since past 3 years. There are number of components in the dashboard like speedometer, level gauge, etc. EDPL purchase these individual components from various suppliers and assembles them at their works for onward supply to MUL. One of the major components namely "Starter Switch" is always the problem. Since the EDPL does not observe any Systematic Inventory Control methods in their purchasing activities, they just order the quantity as and when the demand arises. As this product is not available off the shelf, many a times delays occur in arranging for assembled to MUL. This in turn, results into a financial loss to EDPL due to penalties imposed by MUL as per the agreement, towards delays in supply of dashboard assembly. The information gathered from EDPL shows that the annual demand of the item, Starter Switch is 5000 nos. The unit price of the item is Rs.50 each. The inventory carrying cost and ordering cost is 20% and Rs. 40 per order respectively. a) Explain the role of fourth party Logistics in the above case. b) How EDPL can avoid financial penalties imposed by MUL? c) Calculate Economic Order Quantity (EOQ) for the item under reference, by using the available information.

Answer rating: 100% (QA)

A 4PL is a fourth logistics provider and it essentially takes thirdparty logistics a step further by managing resources technology infrastructure and even manage external 3PLs to design build and prov... View the full answer