Schneider Gmbh

Quantity Price H Min. Point Q # of Orders Total Cost

1 - 1999 $ 40.00 $ 10.00 537 537 45 $ 965,366.56
2000 - 3999 $ 38.00 $ 9.50 551 2000 12 $ 922,220.00
4000 - 7999 $ 35.00 $ 8.75 574 4000 6 $ 857,860.00
8000 + $ 32.00 $ 8.00 600 8000 3 $ 800,180.00
Lead time 2 Weeks Min. 537 $ 800,180.00

Yamaguchi
Quantity Price H Min. Point Q # of Orders Total Cost
1 - 1999 $40.00 $10.00 537 537 45 $965,366.56
2000 - 3999 $36.00 $9.00 566 2000 12 $873,720.00
4000 - 7999 $34.00 $8.50 582 4000 6 $833,360.00
8000 + $32.00 $8.00 600 8000 3 $800,180.00
Lead time 4 Weeks Min. 537 $800,180.00

Demand (D) 24,000

Holding
25%
Cost (H)
Ordering
Cost (S) $ 60.00
1.To see the respective costs of the different ordering policies by considering costs alone, we used Quantity Discount Model. T
find total cost we need to calculate Holding Cost because it is given in persentage which depends on the ordering price. Then
need to find out minimum order point based on each Holding Cost. Since all Min. Points are in range 1-1999 we choose the
smallest number to begin Total Cost calculation. Then to see discounts applying we should use min. quantity for each discount
After all calcularions for both condidates, we can see that for both companies answer is the same - best option is ordering
8000+units @ $32.00. Therefore, based on only cost both companies have same value.

2. The just-in-time (JIT) inventory system is an operations management strategy where goods are ordered as required by the
system. In a JIT environment, shipments should arrive as required. Lead time may happen which would lead to a stock out. If l
lead time, then we have less stock out probability. However, shipping costs will be higher while order size will be lower. Based
this description Schneider Gmbh supplier will be suitable because their lead time is 2 weeks which is less then Yamaguchi
supplier.

3. No inventory holding is considered in JIT. If a stock out happens, the company pays a penalty. The company should keep
inventory in safety stock and buffer stock so stock outs do not happen. The company should order so there is no stockout and
least cost.
d Quantity Discount Model. To
on the ordering price. Then we
nge 1-1999 we choose the
n. quantity for each discount.
- best option is ordering

ordered as required by the

would lead to a stock out. If less
rder size will be lower. Based on
h is less then Yamaguchi

The company should keep

r so there is no stockout and