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Problem
The FLEX Corporation has two plants located in Spokane Washington and Houston, Texas that manufacture components A and B respectively for use at an assembly plant in Syracuse, NY.
Transit time from Spokane and Houston to the plant in Syracuse is 9 days. Demand at the Syracuse plant is 250 units of component A and 125 units of component B each day.
The plants ship in full truckloads, each truck has a maximum capacity of 1750 components (both components are of similar size). Holding cost for the assembly plant and in-transit inventory is $0.50/unit/ day and freight cost for a truckload is $ 1500 from either component plant to Syracuse.
I. Calculate the total logistics cost of this plan.
II. Calculate the total logistics cost of a smaller truck which only holds 1375 units but costs $1200
III. What is the ideal order size (EOQ) for each truck price for each unit? In other words what is the idea order size for each cell given holding cost c = $0.50 per unit per day.
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