question a) how would the current and poposed plans compare in terms of cost (while recognizing all the relevant cost)?

b) how much is the safety stock and the annual cycle inventory and how would them your recommendations?

Pytec Engineered Materials, Inc. Is a wholesale distributor of plane parts that is a supplier to one of the largest plane manufacturers in the world. Two former airplane manufacturing techniclans, Matt Briggs and Dave Floyd. The company started out at Briggs' family house's garage. Over the next 10 years, their business grew. With the growth, the company moved from the garage to an old packaging warehouse in Everett. Larger square footage of the warehouse gave Briggs and Floyd the opportunity to store more inventory, and, thus, they were able to offer a larger portfolio of plane parts. Due to the growth of the plane sales of their customer, the large plane manufacturer, and due to their expanded portfolio of plane parts, Pytec's started experiencing tremendous growth. Twenty years later, Pytec was the highestvolume independent supplier of plane parts in PNW. Recently, Pytec relocated to a new location off 1-5 in Mukitteo area. Their new location is composed of offices and multiple warehouses. The warehouses have the capacity to hold more than 100,000ft2 of materials. The capacity utilization of the new warehouses had increased from 65% to almost 95%, even though only a limited number the new products were introduced by Pytec. However, due to unexpected developments in the airplane market, the sales growth for Pytec has started to flatten. With the aim of improving things, Briggs and Floyd hired a manager to help them with decision making. Laura Crowley was the first decision-maker to join the company in many years. On her first day as the materials manager for Pytec, which was a new position created for her, Laura Crowley received the status reports on inventory and orders shipped. The report included a note from Tom Finlev, the purchasing manager: "These are the reports that include data on inventory and performance of customer service. Since we did a complete physical inventory count at the end of last week, we are confident that the inventory information is accurate. For some of the data/information you requested, we have been informed that no standardized record keeping had been utilized. We would appreciate it if one of the tasks you plan to work on includes creating record keeping structures for those areas. Looking forward to working together!" From the reports and the note, Crowley understood that agrregate inventory information was not available. In order start her analysis, Crowley identified 100 random items and started putting together data on inventory and customer service for those items. She was hoping to achieve a high-level understanding of the inventory dynamics. Through her analysis, she concluded that there were several issues with the way operations were run at Pytec. Inventory was not at the right place. Even though average on hand inventory seemed be 60 days' worth, they were lagging in customer service. They were not able to fulfill all of the customer's order from on-hand inventory and had to backorder them. This led to a demand loss of 10% due to the customer deciding to go with a competitor to supply their parts on those instances. Crowley knew that experiencing stockouts could be very costly for the company, especially in the long term, so she decided that they should target a cycle service level of 94%. Initiating changes for a company that has been operating this long is not easy, and Crowley knew that, However, she wanted to start implementing improvements and showing results. Thus, she moved on to focus on two products from the larger portfolio of parts, the CSN120 exhaust system and the SWS108 Wing tip light, She realized that if she can achieve significant gains from updating the inventory management structure of these two parts, she would have a chance to convince Briggs and Floyd that a complete overhaul of the inventory management system at pytec would be very beneficial. The CSN120 exhaust system is supplied by a company called Airxhaust located. Below is the data on the observed demand for this part for the first 21 weeks of the Year fassume Pytec operates 52 weeks per vear): \begin{tabular}{|l|l|} \hline Week & Actual Demand \\ \hline 1 & 76 \\ \hline 2 & 75 \\ \hline 3 & 78 \\ \hline 4 & 77 \\ \hline 5 & 75 \\ \hline 6 & 75 \\ \hline 7 & 74 \\ \hline 8 & 76 \\ \hline 9 & 73 \\ \hline 10 & 73 \\ \hline \end{tabular} \begin{tabular}{|l|l|} \hline 11 & 75 \\ \hline 12 & 71 \\ \hline 13 & 72 \\ \hline 14 & 75 \\ \hline 15 & 72 \\ \hline \end{tabular} AirXhaust has been shipping orders in lot sizes of 250 . The time it took orders to arrive from AirXhaust Pytec has been, on average, 1.5 weeks. Currently, we are at the end of week 21. We have zero on hand inventory and 11 units backordered. There is a scheduled receipt of 150 units (meaning 150 units have been ordered but was not received yet). The supplier of SWS108 wing tip light is FlySupport Corp, located in Montana. Below is the data on the observed demand for this part for weeks 11 to 21 (We don't have observed demand data for this part for weeks 110 since this is a new product that is introduced in week 11): Currently, at the end of week 21, we have 324 on hand inventory (no backorders or scheduled receipts). Lot size for orders coming from fivsupport is currently 1,500, and lead time has been 1.5 week on average. Pytec has been charging the plane manufacturer $16.50 /item as the wholesale price for CSN120 exhaust? system and $11.50/ item as the wholesale price for 5w sios wing tip light. The profit margin for Pytec is: 35\% (of the wholesale price) for the CSN120 exhaust system and 4596 (of the wholesale price) for the SWS108 wing tip light. Based on past data, holding cost peritem for any part is at 19g of the item's value. This holding cost: includes both the physical cost of carrying and storing the parts, and the opportunity cost of investing funds in inventory. Crowler decides that the other expenditures for the warehouser which was buit for S1.5 millon, such as utilities and maintenance, can be ignored since they will not havo an wasnow buit or Based on past data, holding cost per item for any part is at 19% of the item's value. This holding cost includes both the physical cost of carrying and storing the parts, and the opportunity cost of investing funds in inventory. Crowley decides that the other expenditures for the warehouse, which was built for $1.5 million, such as utilities and maintenance, can be ignored since they will not have an impact on the inventory policy employed. Pytec incurs a fixed out-of-pocket cost of ordering supplies each time they place an order. This cost is estimated to be \$45 per order for CSN120 exhaust system and \$30 per order for SWS108 wing tip light