4 KLG is a textile manufacturer in Shanghai. They want to expand their t-shirt business into the UnitedStates. They have dedicated a factory in KLG to making the tshirts, and the production rate at thatfacility is 250 pallets of t-shirts per day. KLG's factory uses a just-in time production model so theystore no safety stock at their manufacturing facility in Shanghai. The cost of space at the Shanghaifacility is $30 per pallet per year. Each pallet has a value of $2000. KLG is opening a distributioncenter in Los Angeles from which they will serve the American demand for 250 pallets of t-shirts perday. They keep a safety stock of 1200 pallets of t-shirts at the distribution center. The cost of spaceat the LA facility is $40 per pallet per year. Each pallet has a value of $2200. KLG hires you as alogistics consultant to help them decide whether to transport the t-shirts from Shanghai to LosAngeles using sea or air. KLG uses a holding cost rate of 20%.FlyHigh Airline has submitted a bid to KLG. They will guarantee a transport time of 3 days and willaccept shipments up to 400 pallets in size. They will charge $1300 per shipment transportation costsand $500 per shipment material handling costs.OceanMotion is a sea cargo line that has also submitted a bid to KLG. They guarantee a transporttime of 18 days and will accept any size shipment. They charge a flat transportation and handling feeof $1000 per shipment. In the following questions, express your answer in terms of q only wherenecessary.Calculate the annual pipeline inventory costs when air is the chosen mode. $millionCalculate the annual holding cost when at the plant if shipment size is 400 pallets. $

Inventory and holding cost are crucial concepts in supply chain management, impacting a company's…

Answered: KLG is a textile manufacturer in…

Principles Of Marketing

17th Edition

ISBN:9780134492513

Author:Kotler, Philip, Armstrong, Gary (gary M.)

Publisher:Kotler, Philip, Armstrong, Gary (gary M.)

Chapter1: Marketing: Creating Customer Value And Engagement

Section: Chapter Questions

Problem 1.1DQ

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