Assignment Task:
You are currently working for BestMotors, a US manufacturer. Your main responsibility is managing the shipping of motors from your supplier in China to your company's factory in Michigan.
Demand for the motors is normally distributed with an average of 100000 motors per year and an annual standard deviation of 7000. BestMotors currently purchases motors each year from the supplier at a price of $114 per unit.
The lead time for the delivery is 7 days on average, with a standard deviation of 4.0 days. You use Carrier RGO, which charges $5 per motor, with a minimum shipment of 1000 motors (i.e., Q=1000 motors.) Your company takes ownership of the shipment at the supplier's dock and will have to incur any holding costs from that point on. Your company's annual holding charge is 15%, a cycle service level of 95% and uses a 365 days per year for planning purposes. Your company includes the cost of transportation in the cost of the motors when calculating inventory costs.
Part 1: What is the expected demand (in motors) over lead time? Round your answer to the nearest integer
What is the standard deviation of demand of motors over lead time? Round your answer to the nearest integer
Part 2: What is the expected annual cycle stock holding cost? Enter a dollar value and round your answer UP to the nearest integer. e.g., If it is $31.60, enter 32.
What is the expected annual safety stock holding cost? Enter a dollar value and round your answer UP to the nearest integer. e.g., If it is $31.60, enter 32.
What is the expected annual pipeline inventory holding cost? Enter a dollar value and round your answer UP to the nearest integer. e.g., If it is $31.60, enter 32.
Part 3: What is the expected annual transportation cost that Carrier RGO will charge? Enter a dollar value and round your answer UP to the nearest e.g., If it is $31.60, enter 32.integer.