The GLOBAL Company has assembly plants located in Norfolk, VA and in Boston, MA that produce widgets. Each widget requires one unit each of two components. Component 1 is produced at a plant in Shanghai, China and component 2 is produced at a plant in Ningbo, China. Since both component plants are close to ports, each assembly plant (separately) receives full container load shipments from each component plant. Container capacity is 4000 units (of either component). Deliveries are to the Boston and Norfolk ports which are close to the assembly plant locations. Thus there the transport cost from the component plants to the port in China and from the delivered port in the US to the assembly plant are negligible. The cost for a container to be shipped from Shanghai or Ningbo to Boston or Norfolk is $ 2000 per container. Transit time is 30 day and the production rate at each plant is 200 widgets per day. Also assume a holding cost of $ 0.2/unit/day across the system. GLOBAL takes possession of goods at the component supplier and thus incurs all costs in transit.
(a) Draw the supply chain map for GLOBAL showing flows and transit times.
(b) GLOBAL operates with all direct loads being shipped and full container shipments. Calculate the transport costs per day, the in transit inventory costs per day and the cycle stock costs at the assembly plants as well as the total supply chain costs for the system.
(c) Provide the optimum shipment size for each link. Why is it optimal not to ship full containers?