Green Thumb, a manufacturer of lawn mowers and snowblowers has historically purchased a thousand bearings per week from a local supplier who charges $1.00 per bearing. The purchasing manager has identified another potential source willing to supply the bearings at $0.97 per bearing. Before making his decision, the purchasing manager evaluates the performance of the two suppliers. The local supplier has an average lead time of two weeks and has agreed to deliver the bearings in batches of 2,000. Based on past on-time Performance, the purchasing manager estimates that the lead time has a standard deviation of one week. The new source has an average lead time of six weeks with a standard deviation of four weeks. The new source requires a minimum batch size of 8,000 bearings. Which supplier should the purchasing manager go with (ignore ordering cost and focus on material cost and holding cost when making your decision)? Green Thumb has a holding cost of 25 percent. It currently uses a continuous review policy for managing inventory and aims for a cycle service level of 95 percent. Weekly demand has a mean of 1,000 and a standard deviation of 300.
Critical Path Method
The critical path is the longest succession of tasks that has to be successfully completed to conclude a project entirely. The tasks involved in the sequence are called critical activities, as any task getting delayed will result in the whole project getting delayed. To determine the time duration of a project, the critical path has to be identified. The critical path method or CPM is used by project managers to evaluate the least amount of time required to finish each task with the least amount of delay.
Cost Analysis
The entire idea of cost of production or definition of production cost is applied corresponding or we can say that it is related to investment or money cost. Money cost or investment refers to any money expenditure which the firm or supplier or producer undertakes in purchasing or hiring factor of production or factor services.
Inventory Management
Inventory management is the process or system of handling all the goods that an organization owns. In simpler terms, inventory management deals with how a company orders, stores, and uses its goods.
Project Management
Project Management is all about management and optimum utilization of the resources in the best possible manner to develop the software as per the requirement of the client. Here the Project refers to the development of software to meet the end objective of the client by providing the required product or service within a specified Period of time and ensuring high quality. This can be done by managing all the available resources. In short, it can be defined as an application of knowledge, skills, tools, and techniques to meet the objective of the Project. It is the duty of a Project Manager to achieve the objective of the Project as per the specifications given by the client.
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