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a)
To determine: The per unit holding cost of a laptop with Country U production.
a)
Explanation of Solution
Given information:
Safety factory (SF) = 2.25
Holding cost per laptop per week in Country U (H) = $4
Holding cost per laptop per week in Country T (H) = $3.50
Lead time in Country U (L) = 1 week
Lead time in Country T (L) = 8 weeks
Shipping cost (C) = $2
Weekly demand (D) = 1,000 laptops
Standard deviation (S) = 800
Calculation of on-order inventory:
Calculation of on-hand inventory:
Calculation of total average inventory:
Calculation of average weekly holding cost:
Calculation of average holding cost per unit:
The per unit holding cost of a laptop with Country U production is $14.184.
b)
To determine: The per unit holding cost of a laptop with Country T production.
b)
Explanation of Solution
Given information:
Safety factory (SF) = 2.25
Holding cost per laptop per week in Country U (H) = $4
Holding cost per laptop per week in Country T (H) = $3.50
Lead time in Country U (L) = 1 week
Lead time in Country T (L) = 8 weeks
Shipping cost (C) = $2
Weekly demand (D) = 1,000 laptops
Standard deviation (S) = 800
Calculation of on-order inventory:
Calculation of on-hand inventory:
Calculation of total average inventory:
Calculation of average weekly holding cost:
Calculation of average holding cost per unit:
The per unit holding cost of a laptop with Country T production is $46.90.
c)
To determine: The change in cost per laptop if the production switched to Country T.
c)
Explanation of Solution
Given information:
Safety factory (SF) = 2.25
Holding cost per laptop per week in Country U (H) = $4
Holding cost per laptop per week in Country T (H) = $3.50
Lead time in Country U (L) = 1 week
Lead time in Country T (L) = 8 weeks
Shipping cost (C) = $2
Weekly demand (D) = 1,000 laptops
Standard deviation (S) = 800
Assembly time (T) = 40 minutes
Cost of labor in Country U (W) = $40 per hour
Cost of labor in Country T (W) = $10 per hour
When production is in Country U:
Calculation of labor cost per unit:
There is no transportation cost. The average holding cost per unit is $14.184.
Calculation of total cost:
When production is in Country T:
Calculation of labor cost per unit:
The shipping cost is $2. The average holding cost per unit is $46.90
Calculation of total cost:
Cost difference when the production moves from Country U to Country T:
The cost increases by $14.72.
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Chapter 11 Solutions
OPERATIONS MANAGEMENT LL W/CONNECT CODE
- 1) View the videos Taco Bell test-drives Live Mas restaurant concept in South Bay (0.32 mins, Ctrl+Click on the link) https://www.youtube.com/watch?v=04wRc5Wg8GU , and First-ever Taco Bell Live Mas Café serving exclusive drinks in Chula Vista (1.56 mins, Ctrl+Click on the link) https://www.youtube.com/watch?v=fq6jDxJk1LM , and answer the following questions: a) What is driving Taco Bell to try a beverage-focused format? b) What type of a process strategy does their beverage-focused format represent? c) What operational issues do you think Taco Bell would face from their beverage-focused format? d) What do you think are the main advantages and disadvantages of kiosk ordering? Note: As a rough guideline, please try to keep the written submission to one or two paragraphs for each of the questions. 2) Taipei Pharmaceuticals is planning to open a new manufacturing facility as part of its expansion plans. The firm has narrowed down the search to locate its new manufacturing facility…arrow_forward1) View the videos Taco Bell test-drives Live Mas restaurant concept in South Bay (0.32 mins, Ctrl+Click on the link) https://www.youtube.com/watch?v=04wRc5Wg8GU , and First-ever Taco Bell Live Mas Café serving exclusive drinks in Chula Vista (1.56 mins, Ctrl+Click on the link) https://www.youtube.com/watch?v=fq6jDxJk1LM , and answer the following questions: a) What is driving Taco Bell to try a beverage-focused format? b) What type of a process strategy does their beverage-focused format represent? c) What operational issues do you think Taco Bell would face from their beverage-focused format? d) What do you think are the main advantages and disadvantages of kiosk ordering? Note: As a rough guideline, please try to keep the written submission to one or two paragraphs for each of the questions. 2) Taipei Pharmaceuticals is planning to open a new manufacturing facility as part of its expansion plans. The firm has narrowed down the search to locate its new manufacturing facility…arrow_forwardThe Clothing Shack is an online retailer of men's, women's, and children's clothing. The company has been in business for four years and makes a modest profit from its online sales. However, in an effort to compete successfully against online retailing heavyweights, the Clothing Shack's marketing director, Makaya O'Neil, has determined that the Clothing Shack's marketing information systems need improvement. Ms. O'Neil feels that the Clothing Shack should begin sending out catalogs to its customers, keep better track of its customer's buying habits, perform target marketing, and provide a more personalized shopping experience for its customers. Several months ago, Ms. O'Neil submitted a systems service request (SSR) to the Clothing Shack's steering committee. The committee unanimously approved this project. You were assigned to the project at that time and have since helped your project team successfully complete the project initiation and planning phase. Your team is now ready to move…arrow_forward
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