Parts produced in lots

1200

600

42000

304

50

15200
Assembled component worth cost/unit total cost avg. lead time annual demand businees weeks
2 30 40 70 4 3800 50
Distribution centers modem price
5 320

Pipeline inventory 195

$pipeline inventory 62400

Avg. cycle inventory 200

Safety inventory 195

Total inventory 2950

demand at each distribution Avg. shipment size avg. lead time for delivery cariies week supply
65 400 3 3
lots unit raw material cost value added in mf. Unit
150 140 1

Avg. cycle inventory 75

$ value of inventory 33000

avg. demand /week 84

Pipeline inventory 252

Cost of pipeline invento 290

$ of pipeline inventory 73080

value added price total cost lead time annual demand weeks per year
300 440 3 4200 50
Demand of paper carton
160

Before

After change

Savings
$/carton Inbound shipment from vendor avg. lead time opeartes per year carries supply
25 1150 2 52 3

avg. cycle inventory 575

safety stock 480
Pipeline inventory 320

Average aggregate inve 1375

Aggregate inventory va 34375

avg. cycle inventory 225

Safety stock 160
Pipeline inventory 160

Average aggregate inve 545

Aggregate inventory va 13625

Vendor1 Vendor2

Average aggregate inve 1375 545 830

Aggregate inventory va 34375 13625 20750

reduce lead time week reduce shipment of cartons reduce safety stock
1 450 1
 40000 13000000

a 8000 10400000
b 12000 1950000
c 20000 650000

SKU Code Unit Value Demand (units) Dollar

X104 $2.40 2,600 $6,240.00
A104 $0.35 1,030 $360.50
U404 $0.84 360 $302.40
L205 $4.30 60 $258.00
D205 $4.75 25 $118.75
L104 $0.02 4,500 $90.00
X205 $2.50 35 $87.50
S104 $0.27 250 $67.50

Total 7525
 a a b b c c
0.2 0.8 0.3 0.15 0.5 0.05

1 82.93 82.93
2 4.79 87.72
3 4.02 91.74
4 3.43 95.17
5 1.58 96.74
6 1.20 97.94
7 1.16 99.10
8 0.90 100.00
 pounds rolls cost/roll annual holding cost
1500 2250 875 16

a 42

b 5.1
each order cost Assume 200 work days
55 275
 405 15 0.35

a 645.4234

b 1.593638
 demand/year replenish stock price holding cost
20400 75 3

a 1009.95049384

b 20.1990098767

c 16.0898975734

d 125.538461538

e 125.538461538

f 1135.48895537
days working days
2 325