International Market (IM), a chain of store with international wares, imports decorative boxes (deco boxes) for indoor plants from Indonesia. Weekly demand for the deco boxes averages 1,500 across the company. Each box costs IM $10. An order of boxes shipped from Indonesia incurs the fixed transportation and delivery cost of $5,000. IM incurs a holding cost of 25% per year to carry inventory. Assume 52 weeks in the year. a) Determine the optimal order quantity for deco boxes at IM. Determine the ordering and holding costs associate with this ordering policy. b) Suppose the standard deviation of demand is 800 pots per week. If the deliver lead time from Indonesia is 9 weeks, and IM wants to provide its customers with a service level of 94%, how much safety stock should the company carry? What is the additional cost associated with holding this safety stock? c) X-P-Dite is a new shipping company that promises to reduce the delivery lead time for planters from 9 weeks to 3 weeks using alternative shipping methods and expedited customs clearance. This new shipping method will cost HG an additional $0.50 per unit. Should IM go with X-P-Dite? Why or why not? Quantify the impact of the change.
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.
- International Market (IM), a chain of store with international wares, imports decorative boxes (deco boxes) for indoor plants from Indonesia. Weekly demand for the deco boxes averages 1,500 across the company. Each box costs IM $10. An order of boxes shipped from Indonesia incurs the fixed transportation and delivery cost of $5,000. IM incurs a holding cost of 25% per year to carry inventory. Assume 52 weeks in the year.
a) Determine the optimal order quantity for deco boxes at IM. Determine the ordering and holding costs associate with this ordering policy.
b) Suppose the standard deviation of demand is 800 pots per week. If the deliver lead time from Indonesia is 9 weeks, and IM wants to provide its customers with a service level of 94%, how much safety stock should the company carry? What is the additional cost associated with holding this safety stock?
c) X-P-Dite is a new shipping company that promises to reduce the delivery lead time for planters from 9 weeks to 3 weeks using alternative shipping methods and expedited customs clearance. This new shipping method will cost HG an additional $0.50 per unit. Should IM go with X-P-Dite? Why or why not? Quantify the impact of the change.
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