What is the optimal order size and annual cost per product

Assignment Help Operation Management

Reference no: EM13970680

SuperPart, an auto part distributor, has a large warehouse in Istanbul region and is deciding on a policy for the use of TL or TLT transportation for inbound shipping. TLT shipping costs $1 per unit. TL shipping costs $800 per truck plus $100 per pickup. Thus, a truck used to pickup from three suppliers costs 800 + 3 x 100 = $1100. A truck can carry up to 2000 units. SuperPart incurs a fixed cost of $100 for each order placed with a supplier. Thus, an order with three distinct suppliers incurs an ordering cost of $300. Each unit costs $50, and SuperPart uses a holding cost of a 20 percent. Assume that product from each supplier has annual demand of 3000 units.

a) What is the optimal order size and annual cost if LTL shipping used? What is the time between orders?

b) What is the optimal order size and annual cost per product if TL shipping is used with a separate truck for each supplier? What is the time between orders?

c) What is the shipping policy you recommend if each product has an annual demand of 3000? What is shipping policy you recommend for products with an annual demand of 1500?

Reference no: EM13970680

Questions Cloud

Inventory and subcontracting to absorb the fluctuations : ABC Company uses overtime, inventory and subcontracting to absorb the fluctuations in demand for its playgrounds for children. An aggregate production plan is devised annually and updated quarterly. Demand must be satisfied in the periods it occurs; ..

Two major corporations in different industries : Research the Websites of two major corporations in different industries (examples: manufacturing, retail, transportation, utilities, healthcare, communication). What conclusion do you reach about whether an environmentally conscious (or green) person..

Visualize yourself as an executive at target : Visualize yourself as an executive at Target. Develop a policy to empower customer service desk associates to resolve customer problems, including the limits to their empowerment.

Respective cash flows and probabilities of occurrence : A decision maker must decide whether or not automate a given process. Depending on the technological success of the automation project, the result will turn out to be either poor, fair, or excellent. Show the expected future events (outcomes), along ..

What is the optimal order size and annual cost per product : SuperPart, an auto part distributor, has a large warehouse in Istanbul region and is deciding on a policy for the use of TL or TLT transportation for inbound shipping. TLT shipping costs $1 per unit. TL shipping costs $800 per truck plus $100 per pic..

Differences between sales promotion and advertising : Why is it important that the advertising media and creative department work closely together? Why is public relations sometimes referred to as a marketing stepchild? What are the main differences between sales promotion and advertising?

What is the risk of being a best cost strategy firm : Using an advanced search engine, one can locate three companies that indicate they are employing a best-cost producer strategy: Dell computers, Toyota, and Costless Electronics. What is common among these companies, how are they different than other ..

About the flu shot dosage : A hospital in a developing nation is forced to manually put the flu shot vaccine into syringes. The recommended dosage for the flu shot is 0.5mL. The local health authorities define all syringes that have less than 0.45ml or more than 0.55mL as defec..

What is the weekly multi-factor productivity for plant : Plant B produces 950 units per hour. The cogdart sells for $24.00 per unit. The plants works an eight (8) hour shift five (5) days per week. There are two (2) workers assigned to the production line. The average hourly rate per worker is $21.50. What..

User Account

All Pages