Question: The Bright Corporation assembles widgets at its two assembly plants located in Indianapolis, Indiana and in Huntsville, Alabama. Each assembly plant produces 25,000 assembled widgets
The Bright Corporation assembles widgets at its two assembly plants located in Indianapolis, Indiana and in Huntsville, Alabama. Each assembly plant produces 25,000 assembled widgets per year. Each widget requires one unit each of three different components. Component 1 is produced in a plant in Salt Lake City, Component 2 is produced in a plant in Jacksonville and Component 3 is produced in a plant in Seattle. Currently all components are shipped full truckload to a warehouse in Denver. From that warehouse, full truckloads are shipped to the assembly plants. The inbound shipments to Denver thus carry components for all assembly plants. The outbound shipments out of Denver carry all components for assembly plant. Travel time between component plants and the warehouse and between the warehouse and assembly plants, as well as the distance in miles is given below. Route Distance (miles) Travel Time (days) Salt Lake City Denver 250 1 Jacksonville Denver 1,750 3 Seattle Denver 1,750 3 Denver Indianapolis 1,083.33 3 Denver Huntsville 1,083.33 3 The tuck capacity is 8,000 units. The cost for a truck to operate on any route is calculated as 1,000+(4*distance in miles). Thus, for exampole, the cost for a tuck to ship from Salt Lake City to Denver is 1,000+(4*250)=$2,000. The holding cost per unit per year at assembly plants is $50/unit/year. The holding cost per unit per year at Denver is $12.50/unit/year. All in transit inventory are charged a holding cost of $12.50/unit/year. Assume 300 days of operation in a year. A) Provide the transport costs, in transit inventory holding costs and cycle stock holding costs as well as the total supply chain cost for the current mode of operation. B) Bright Corporation wants to replace all shipments with Optimal Shipments while maintaining the routes. Provide the optimal shipment on each route as well as the associated transport costs, in transit inventory holding costs and cycle stock holding costs as well as the total supply chain cost for the optimal shipments approach to managing the operation. C) Bright Corporation is considering eliminating the warehouse in Denver and shipping full truckload directly from component plants to the assembly plants. The associated travel time and lead time is provided below. Route Distance (miles) Lead Time (days) Salt Lake City Indianapolis 1,000 4 Salt Lake City Huntsville 1,000 4 Jacksonville Indianapolis 2,000 6 Jacksonville Huntsville 2,000 6 Seattle Indianapolis 2,000 6 Seattle - Huntsville 2,000 6 The truck capacity remains 8,000 units and the truck cost is calculated as before as 1,000+(4*Distance). In transit inventory holding cost is $12.50/unit/year and the assembly plant holding cost is $50/unit/year. Assume 300 days of operation in a year. Provide the transportation costs, in transit inventory holding costs and cycle stock holding costs as well as the total supply chain cost for this mode of operation. D) Bright Corporations is considering replacing all the shipments with optimal shipments. Under this approach, Bright Corporation would like to find the optimal shipments on each route as well as the associated transport costs, in transit inventory holding costs and cycle stock holding costs as well as the total supply chain cost for the optimal shipments approach to managing the operation. E) Why are there differences across the four approaches to operating the supply chain? Which one would you recommend and why?
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