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##### Harley-Davidson purchases components from three suppliers

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Question;1. Harley-Davidson;Harley-Davidson;purchases components from three suppliers. Components purchased from Supplier A;are priced at $5 each and used at the rate of 20,000 units per year. Components;purchased from Supplier B are priced at $4 each and are used at the rate of;2,500 units per year. Components purchased from Supplier C are priced at $5;each and used at the rate of 900 units per year.;Currently;Harley purchases a separate truckload from each supplier. As part of its JIT;drive, Harley has decided to aggregate purchases from the three suppliers. The;trucking company charges a fixed cost of $400 for the truck with an additional;charge of $100 for each stop. Thus, if Harley asks for a pickup from only one;supplier, the trucking company charges $500, from two suppliers, it charges;$600: and from three suppliers, it charges $700.;Harley;incurs a holding cost of 20 percent per year.;1. Harley-Davidson (Problem found at end of exam.);Products with lots ordered and delivered independently. (15;Points);A) Determine the order quantity for each;supplier.;i. Supplier A;ii. Supplier B;iii. Supplier C;B) Determine the total cost (order cost +;holding cost) for this inventory policy.;i. Supplier A;ii. Supplier B;iii. Supplier C;iv. Total;Products with lots ordered and delivered jointly.;15 Points);C) Determine the combined fixed;order cost per order (S*).;D) Determine the optimal order;frequency (n*).;E) Determine the order quantity for each;supplier.;i. Supplier A;ii. Supplier B;iii. Supplier C;F) Determine the total cost;(order cost + holding cost) for this ordering policy.;2. Red Door Pharmacy;The Red Door Pharmacy has 25 retail outlets;in the Chicago region. The current policy is to carry every drug in each retail;outlet. Red Door is investigating the possibility of centralizing some of the;drugs in one central location. Delivery charge would increase by $0.02 per unit;if a drug were centralized. The increase in delivery charge comes from the;additional cost of operating the shuttle from the central location to each of;the other locations. At each retail outlet, Red Door has weekly replenishment;(a replenishment order is placed once every seven days), and replenishment;orders with suppliers must be placed three days before delivery. Red Door plans;to stick to once-a-week ordering even if a drug is centralized.;Red Door uses an inventory;holding cost of 20 percent and aims for a cycle service level of 99;percent. Assume that demand across;stores is independent.;Consider a drug with daily demand;at each store that is normally distributed, with a mean of 5 and a standard;deviation of 4. The drug costs $10 per unit.;2. Red Door Pharmacy (Problem found at end of exam.);Disaggregate option (15 Points);A) Determine the standard deviation;of demand per store over the lead time and review period.;B) Determine the safety stock per;store.;C) Determine the total safety;inventory for this policy.;Aggregate option (15 Points);D) Determine the daily standard;deviation of demand.;E) Determine the standard;deviation of demand over the lead time and review period.;F) Determine the total safety;inventory for this policy.;Comparison (10 Points);F) Determine the annual holding;cost savings for safety inventory for the aggregate approach.;G) Determine the annual increase;in delivery cost for the aggregate approach.

Paper#57336 | Written in 18-Jul-2015

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