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Fliboard Current Operation Fliboard is a startup company that develops self-balancing scooters (hoverboards) and sells online - 52 weeks a year Fliboard currently sells two products, Proboard (P1) and Babyboard (P2) Weekly demand (independent) - Proboard (P1) : 30 units per week with standard deviation of 15 units per week - Babyboard (P2): 20 units per week with standard deviation of 10 units per week Price - Proboard : $400 Babyboard: $300 Costs of battery - Proboard : $150 Samsung 42V Li-ion battery (B1) Babyboard: $100 HoverFixer 36V Li-ion battery (B2) Cost of material other than battery CONTROL BOARDS Proboard : $150 Babyboard: $100 (Source) http://www.taringa.net/posts/offtopic/19119867/Los-10-inventos-tecno-del-ano.html (Source) http://urbanview.ng/2016/04/15/the-hoverboard-craze (Source) http://bestelectrichoverboard.com/ BATTERY LOGIC BOARD Fliboard Question 1 Fliboard uses continuous review policy Lot size is calculated using economic order quantity (EOQ) - Batteries are supplied independently from each supplier 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 Samsung battery : $1,000 per order - HoverFixer battery: $1,000 per order Inventory holding cost of battery Samsung battery : $60 - HoverFixer battery: $40 Calculate following values for replenishing battery (1-1) Lot size (Q) For Samsung battery For HoverFixer battery (1-2) Safety inventory (ss) For Samsung battery For HoverFixer battery (1-3) Annual ordering cost (AOC) For Samsung battery For HoverFixer battery (1-4) Annual holding cost (AHC) For Samsung battery For HoverFixer battery - (1-5) Annual material cost including battery (AMC) For Proboard For Babyboard (Source) http://www.taringa.net/posts/offtopic/19119867/Los-10-inventos-tecno-del-ano.html (Source) http://urbanview.ng/2016/04/15/the-hoverboard-craze (Source) http://www.telegraph.co.ukews/uknews/crime/11940556/Police-officer-illegally-rides-hoverboard-scooter-on-London-street.html Fliboard Question 2 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 Hover Fixer 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 CONTROL BOARDS BATTERY LOGIC BOARD Source) http://www.taringa.net/posts/offtopic/19119867/Los-10-inventos-tecno-del-ano.html (Source) http://urbanview.ng/2016/04/15/the-hoverboard-craze (Source) http://www.cnet.com/how-to/buy-a-hoverboard/ Question 2 New Design - Component Commonality (Single Source) Calculate total profit of the current operation (two hoverboards) - Assume annual ordering cost and holding cost of all components except batteries are negligible Thus, we only need to consider costs AOC, AHC, and AMC in (2-3), (2-4) and (2-5) for calculating profit - (2-6) Total profit Profit = Revenue - Total Cost Where total cost is sum of: - Annual material cost - Annual ordering cost - Annual holding cost Fliboard Question 3 . Fliboard uses continuous review policy - Lot size is calculated using economic order quantity (EOQ) - Now Fliboard decides to use Samsung battery for both hoverboards so that demands of batteries can be aggregated Target CSL - Samsung battery: 0.99 Replenishment lead time Samsung battery: 4 weeks Fixed order cost Samsung battery: $1,000 per order Inventory holding cost of battery - Samsung battery: $60 BATTERY Calculate following values for replenishing battery - (3-1) Lot size (Q) For Samsung battery - (3-2) Safety inventory (ss) For Samsung battery - (3-3) Annual ordering cost (AOC) For Samsung battery - (3-4) Annual holding cost (AHC) For Samsung battery - (3-5) Annual material cost including battery (AMC) For Proboard For Babyboard (cost increases due to using Samsung battery) CONTROL BOARDS LOGIC BOARD (Source) http://www.taringa.net/posts/offtopic/19119867/Los-10-inventos-tecno-del-ano.html (Source) http://urbanview.ng/2016/04/15/the-hoverboard-craze (Source) http://www.gettyimages.com/detailews-photo/bay-rides-a-hoverboard-on-the-day-after-christmas-in-san-news-photo/502561434 Question 3 Comparison Calculate total profit of the current operation (two hoverboards) - Assume annual ordering cost and holding cost of all components except batteries are negligible Thus, we only need to consider costs AOC, AHC, and AMC in (3-3), (3-4) and (3-5) for calculating profit - (3-6) Total profit Profit = Revenue - Total Cost Where total cost is sum of: Annual material cost - Annual ordering cost - Annual holding cost Question 4 . - (4-1) What should Fliboard do: Current operation, New operation, or New design? (Source) http://urbanview.ng/2016/04/15/the-hoverboard-craze/ Case Study Answer Sheet Student name Student ID Round answer to the nearest integer Question 1 Samsung battery HoverFixer battery Current Q SS SS (1-1) Q (1-2) (1-3) Annual ordering cost (AOC) (1-4) Annual holding cost (AHC) Annual ordering cost Annual holding cost Proboard Babyboard Annual material cost (1-5) Annual material cost (AMC) (1-6) Total profit Question 2 Samsung battery Hover Fixer battery Joint ordering Q SS SS (2-1) Q (2-2) (2-3) Annual ordering cost (AOC) (2-4) Annual holding cost (AHC) Annual holding cost Proboard Babyboard Annual material cost (2-5) Annual material cost (AMC) (2-6) Total profit Samsung battery SS Question 3 Single source (component commonality) (3-1) Q (3-2) (3-3) Annual ordering cost (AOC) (3-4) Annual holding cost (AHC) Proboard Babyboard Annual material cost (3-5) Annual material cost (AMC) (3-6) Total profit Question 4 (4-1) Recommendation