Question: Your analysis will determine if it is worth it. Throughout the world there are only two sources of Schachtel Schmuggel Bannware: CousinsAg , a domestic

Your analysis will determine if it is worth it. Throughout the world there are only two sources of Schachtel Schmuggel Bannware:

  • CousinsAg, a domestic supplier located in Wahoo, Nebraska
  • Dong Hai Supply, an international supplier located in Chengdu, China

Throughout this turnaround, we will ship utilizing Twenty-foot Equivalent Units (TEUs) from each location. Assume the following for all questions:

  • Projected Annual Demand is 21,500 units
  • There are 365 days in a year
  • All product will be shipped to a distribution center in Alliance Fort Worth (AFW) where we will service our customers needs
  • Inventory carrying cost is 32.2%
  • A TEU container can hold up to 600 units of our product.
  • The average labor rate in Chengdu is 10.36 Yuan per hour. The average labor rate in Wahoo, Nebraska is $25.30 per hour.
  • Today's exchange rate is 1 CNY China Yuan Renminbi = 0.14646 US Dollar
  • The Harris EOQ formula is Q* = SQRT((2*Annual Demand*Ordering Cost)/(Inventory Carrying Cost*Unit Price))
  • Our goal is to maintain a 97.7% service level.
  • We have a deviation in daily sales of 11 units.
  • We cannot buy or hold fractional units of a product

How many units of SAFETY STOCK will we need to hold if we purchase everything from CousinsAg?

Group of answer choices

80 units

160 units

352 units

216 units

432 units

2,826 units

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related General Management Questions!