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  • Moon Chem

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    Deep kardani
    9 views2 pages
    The document compares the current transportation and inventory holding costs of supplying 3 customer types to 2 alternative supply chain options. The current strategy incurs a total cost of $70,800 by making individual deliveries to each customer. Option 1 reduces costs to $32,000 by consolidating shipments but increases inventory levels. Option 2 further lowers costs to $27,000 by grouping customers and optimizing order quantities and inventory levels.

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    The document compares the current transportation and inventory holding costs of supplying 3 customer types to 2 alternative supply chain options. The current strategy incurs a total cost of $70,800 by making individual deliveries to each customer. Option 1 reduces costs to $32,000 by consolidating shipments but increases inventory levels. Option 2 further lowers costs to $27,000 by grouping customers and optimizing order quantities and inventory levels.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    9 views2 pages

    Moon Chem

    Uploaded by

    Deep kardani
    The document compares the current transportation and inventory holding costs of supplying 3 customer types to 2 alternative supply chain options. The current strategy incurs a total cost of $70,800 by making individual deliveries to each customer. Option 1 reduces costs to $32,000 by consolidating shipments but increases inventory levels. Option 2 further lowers costs to $27,000 by grouping customers and optimizing order quantities and inventory levels.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 2

    Consumption(

    No. of pounds/ Yearly


    Customer Type Customers month) consumption
    Small (S) 12 1000 12000
    Medium (M) 6 5000 60000
    Large (L) 2 12000 144000

    Current Strategy Option 1

    Transportation cost Total demand 792000


    Small (S) 4800 EOQ 92485.67
    Medium (M) 4800 Lot size 40000
    Large (L) 3200 Transportation cost 27000

    Inventory holding cost Holding cost 5000


    Small (S) 18000
    Medium (M) 30000
    Large (L) 10000

    Total cost 70800 Total cost 32000


    Truck capacity (pounds) 40000
    Truck charge
    Shipment to each customer 400
    Shipment to multiple customer
    Fixed charge 350
    drop-off charge 50
    Chemical cost/pound 1
    Holding cost 25%

    Option 2

    Total demand/group 396000


    EOQ 51892.2
    Lot size 40000
    Transportation cost 17000

    Holding cost 10000

    Total cost 27000

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