Question: The question is to estimate CSL from the given info. You DO NOT need any more info (All written about the plant manager is irrelevant)
The question is to estimate CSL from the given info. You DO NOT need any more info (All written about the plant manager is irrelevant)
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Eastern Electric (EE) is a major appliance manufacturer with a large plant in the Chicago area. EE purchases all the motors for its appliances from Westview Motors, located near Dallas. EE currently purchases 120,000 motors each year from Westview at a price of $120 per motor. Demand has been relatively constant for several years and is expected to stay that way. Each motor averages about 10 pounds in weight, and EE has traditionally purchased lots of 3,000 motors. Westview ships each EE order within a day of receiving it (lead time is one day more than transit time). At its assembly plant, EE carries a safety inventory equal to 50 percent of the average demand for motors during the replenishment lead time. The plant manager at EE has received several proposals for transportation and must decide on the one to accept. The details of various proposals are provided in Table 14-4, where one cwt equals 100 pounds. TABLE 14-4 Transportation Proposals for EE Electric Carrier Range of Quantity Shipped (cwt) AM Railroad 200+ Northeast Trucking 100+ Golden Freightways 50-150 Golden Freightways 150-250 Golden Freightways 250+ Shipping Cost ($/cwt) 6.50 7.50 8.00 6.00 4.00 Eastern Electric (EE) is a major appliance manufacturer with a large plant in the Chicago area. EE purchases all the motors for its appliances from Westview Motors, located near Dallas. EE currently purchases 120,000 motors each year from Westview at a price of $120 per motor. Demand has been relatively constant for several years and is expected to stay that way. Each motor averages about 10 pounds in weight, and EE has traditionally purchased lots of 3,000 motors. Westview ships each EE order within a day of receiving it (lead time is one day more than transit time). At its assembly plant, EE carries a safety inventory equal to 50 percent of the average demand for motors during the replenishment lead time. The plant manager at EE has received several proposals for transportation and must decide on the one to accept. The details of various proposals are provided in Table 14-4, where one cwt equals 100 pounds. TABLE 14-4 Transportation Proposals for EE Electric Carrier Range of Quantity Shipped (cwt) AM Railroad 200+ Northeast Trucking 100+ Golden Freightways 50-150 Golden Freightways 150-250 Golden Freightways 250+ Shipping Cost ($/cwt) 6.50 7.50 8.00 6.00 4.00
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