What is the optimal order quantity you should use

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Reference no: EM134001436

Assignment:

You are a Material Planning & Logistics manager of a manufacturing company ABC. ABC works 260 days in a year. One of the components Y123 that is used in a manufacturing process provided by the supplier in Asia Pacific. The part cost is $50 and the minimum shipping quantity is 1500. The supplier offers the price of $40 if each order is 2500 or more. The shipping cost of one order regardless of the order quantity is $1000. The demand of the component is stable and fixed at total 6500 over each year. You estimate holding cost at 20% annual interest rate.

a.) What is the optimal order quantity you should use?

b.) What is the cost of the proposed solution?

You are presented with a proposal to lease 3D printer that can produce the same part at a rate of 75 parts per day. The setup to produce Y123 is $60. The estimated cost of Y123 produced using 3D printer is $70, which includes lease, service and raw material costs.

c.) What is the optimal batch size for the 3D printer production?

d.) Will you pursue the 3D printer solution?

Reference no: EM134001436

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