PART $1$: Supply Chain Shrinkage

Below is an overview of how materials move through the supply chain. For each set of parties

listed you$$ll also see a loss or defect rate associated with that portion of the supply chain.

A$.$ Suppliers: $1\mathrm{.}0\%$ of all materials delivered are unacceptable for use

B$.$ Manufacturing: $0\mathrm{.}9\%$ of items produced are defective and are thus not shipped

C$.$ Distribution: $1\mathrm{.}1\%$ of the items shipped are lost, stolen, or damaged in transit

D$.$ Retail Store: $1\mathrm{.}2\%$ of items are stolen$/$damaged and thus unavailable for sale

Question #$1$

Using the calculation for damage and defects discussed in lecture, calculate the number of

standardized sets that must be planned for in order to have $7,500$ sets available to the customer

each month.

Question #$2$

Based on our estimates, how many extra kitchen sets will need to be purchased$/$produced to

account for the damage, theft, defects...PER YEAR?

Question #$3$

The kitchen sets sell for $$275\mathrm{.}00$ per set. They cost about $$200$ to produce, deliver, and sell,

though. Based on the number of additional items needed to account for shrinkage, wow much

will the company lose this year?

PART $2$: Impact of Exchange Rates on Manufacturing

A European car company is trying to decide if they should manufacture their vehicles for the US

market in Europe, or in the United States. Please do the calculations that will help this company

come to a decision.

Sale price of vehicle in the United States $-$ $$35,500$

Cost to manufacture the car in Europe, deliver and import to US: $20,000$ Euros

Cost to import the vehicle into the United States $$4,500$

Cost to manufacture the vehicles in the United States $-$ $$28,500$

Question #$4$

Suppose the exchange rate is near $1$ Euro $=$ $$1\mathrm{.}30.$ What would be the profit for the European

car company $($in Euros$)$ if they manufactured their car in Europe? Remember, they have to pay

the import tax.

Question #$5$

Suppose the exchange rate is near $1$ Euro $=$ $$1\mathrm{.}30.$ What would be the profit for the European

car company $($in Euros$)$ if they manufactured their car in the United States? Remember, they

avoid the import tax.