You manage the shipping of a few important motors from your supplier to your company's factory .

Demand for the motors is normally distributed with an average of 100000 motors per year and an annual standard deviation of 8000. Your company currently purchases motors each year from the supplier at a price of $130 per unit.

The lead time for the delivery is 3 days on average, with a standard deviation of 3.5 days. You use Carrier ABC, which charges $7 per motor, with a minimum shipment of 3000 motors (i.e., Q=2000 motors.) Your company takes ownership of the shipment at the supplier’s dock and will have to incur any holding costs from that point on. Your company's holding charge is 13%, a cycle service level of 95% and uses a 365 days per year for planning purposes. Your company includes the cost of transportation in the cost of the motors when calculating inventory costs.

Part 1

What is the expected demand (in motors) over lead time? Round your answer to the nearest integer

 

What is the standard deviation of demand of motors over lead time? Round your answer to the nearest integer

 

Part 2

What is the expected annual cycle stock holding cost? Enter a dollar value and round your answer UP to the nearest integer. e.g., If it is $31.60, enter 32.

  

What is the expected annual safety stock holding cost? Enter a dollar value and round your answer UP to the nearest integer. e.g., If it is $31.60, enter 32.

  

What is the expected annual pipeline inventory holding cost? Enter a dollar value and round your answer UP to the nearest integer. e.g., If it is $31.60, enter 32.

 

Part 3

What is the expected annual transportation cost that Carrier ABC will charge? Enter a dollar value and round your answer UP to the nearest e.g., If it is $31.60, enter 32.integer.

Answer rating: 100% (QA)

Solution Average daily demand d 100000365 27397 274 Std deviation of daily dema... View the full answer