New Operation

Fliboard uses continuous review policy

Now Fliboard orders both batteries jointly from two suppliers

Cycle service level (CSL) Samsung battery : 0.99 HoverFixer battery: 0.99

Replenishment lead time Samsung battery : 4 weeks HoverFixer battery: 4 weeks

Fixed order cost Joint ordering: $1,500 per order

Inventory holding cost of battery Samsung battery : $60 HoverFixer battery: $40

Calculate following values for replenishing battery

(2-1) Lot size (Q) For Samsung battery For HoverFixer battery

(2-2) Safety inventory (ss) For Samsung battery For HoverFixer battery

(2-3) Annual ordering cost (AOC) For both Samsung battery and HoverFixer battery

(2-4) Annual holding cost (AHC) For Samsung battery For HoverFixer battery

(2-5) Annual material cost including battery (AMC) For Proboard For Babyboard

Calculate total profit of the current operation (two hoverboards)

Assume annual ordering cost and holding cost of all components except batteries are negligible

(2-6) Total profit Profit = Revenue Total Cost

Where total cost is sum of:

Annual material cost

Annual ordering cost

Annual holding cost