Maruti Suzuki plants at Gurgaon and Maneshar also manufacture the Nexa range of Cars. The production planning is done based on the sales estimate provided by the marketing department. The demand forecast for the next twelve months provided assumes normal distribution of Nexa Cars with mean monthly demand of 18000 and standard deviation 900. The production planning has targeted 600 Nexa cars assembly per day with standard deviation 30. One of the outsourced component used in the car is tyre, which is procured from the MRF Plant at Chennai at the rate of Rs. 3,500 per tyre. The ordering cost is Rs. 500,000 per order and it takes 5 days to receive the order. The holding cost is 10 % of the cost of item per annum. If you are the Purchase manager for the material planning of the outsourced components, determine the inventory management policy* to minimize the inventory cost in context of tyres. Assume 30 working days in a month. Suppose Bridgestone plant at Maneshar offers the next day delivery of the requirement to both the Maruti plants, but quotes Rs. 3600 per tyre. Will you take up this offer and why? Hint: * You need to calculate EOQ, Safety stock, Re order point and total cost at 95% cycle service level for which z value can be taken as 1.65
Maruti Suzuki plants at Gurgaon and Maneshar also manufacture the Nexa range of Cars. The production planning is done based on the sales estimate provided by the marketing department. The demand
Suppose Bridgestone plant at Maneshar offers the next day delivery of the requirement to both the Maruti plants, but quotes Rs. 3600 per tyre. Will you take up this offer and why?
Hint: * You need to calculate EOQ, Safety stock, Re order point and total cost at 95% cycle service level for which z value can be taken as 1.65
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