What is the optimal order frequency

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Reference no: EM132308594

A distributor of two model of smartphones has a monthly demand of 10,000 units and 4,000 units respectively. Smartphone A has a cost of $100 and smartphone B has a cost of $400. The company holding cost is 25%. The distributor is planning the use a single manufacturer to combine the shipments. The fixed cost of each shipment is $10,000. For each product:

A) Assuming both products are ordered and delivered independently: i) What is the optimal order frequency? ii) What is the optimal order size? iii) What is the resulting cycle inventory? iv) What is the average flow time?

B) Assuming both products are ordered and delivered jointly and the fix cost per shipment increases $1,000 to handle the additional product: i) What is the optimal order frequency? ii) What is the optimal order size? iii) What is the resulting cycle inventory? iv) What is the average flow time?

C) Assuming that products are ordered and delivered jointly but the selected products may vary per order: i) What is the optimal order frequency? ii) What is the optimal order size? iii) What is the resulting cycle inventory? iv) What is the average flow time?

Reference no: EM132308594

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