Ms Futurama, handles a variety of imported auto components. One of the key components is suspension systems.
Question:
Ms Futurama, handles a variety of imported auto components. One of the key components is suspension systems. Considering the criticality of this part, company has built a separate storage facility that has annual fixed cost of US$,5000. Since the components are imported, company is incurring following ordering costs Delivery cost per order = US$2000 Import Duty per Order = US$300 Custom Fees per Order = US$200 Import License per annum = US$200 There is a total demand of 12000 pieces per annum (monthly demand of 1000 pieces with a standard deviation of 100 pieces). The supply lead time is 1 month with a standard deviation of 0.3 month. company is conveniently placing one order every month with an average qty of 1000. The cost per piece is US$30. The annual holding cost rate is 30%. Calculate cycle stock and safety stock point if the firm is willing to tolerate a 1% chance (Z0.99 = 2.32) of a stockout during an order cycle. Also calculate the total cost of inventory.
Quantitative Methods for Business
ISBN: 978-0324651751
11th Edition
Authors: David Anderson, Dennis Sweeney, Thomas Williams, Jeffrey cam