In order to reduce costs, CarCity is considering contracting with a local business to produce the RI25 tires locally, instead of importing the tires from Indonesian suppliers. The local business, named AI Rubber, can produce the tires at the rate of 75 tires day. The production costs are expected to be OMR 14.5 per tire. The setup for a production run requires five hours, with a cost for labor and lost production time of OMR 75 per hour. Each day's production is delivered immediately to CarCity. After one year of operations, CarCity realized that daily demand for the tires was not constant, and some variability existed. the mean of demand is 23.88825 and the standard devation is 0.171895 Assume that CarCity has decided for some reasons to continue procuring the R125 tires from Indonesia, and that the lead time remains constant at 15 days. 1. CarCity has specified a Type 1 service level of 95%. Accordingly, what size of safety stock should be kept in order to achieve this service level?
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.
In order to reduce costs, CarCity is considering contracting with a local business to produce the RI25 tires locally, instead of importing the tires from Indonesian suppliers. The local business, named
1. CarCity has specified a Type 1 service level of 95%. Accordingly, what size of safety stock should be kept in order to achieve this service level?
Step by step
Solved in 2 steps
