You are in charge of inbound transportation for your company for all products coming into your country
Question:
You are in charge of inbound transportation for your company for all products coming into your country from overseas.You use a single ocean carrier, ABC Carriers, and their historical time for transit has been 4 weeks on average with a standard deviation of 1 week.All of your product comes in containers and you have estimated that the value of the product in a container is about $100,000.Your weekly demand, in containers, is about 32 with a standard deviation of 12.Assume a CSL of 95% and a holding charge of 22% per year.
Using ABC Carriers, answer the following questions.
What is your annual expected cost of pipeline inventory? Enter your answer in millions of dollars with 2 decimal places.
What is your expected annual cost of safety stock? Enter your answer in millions of dollars with 2 decimal places.