What is the optimal order size and order frequency

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Reference no: EM132303694

An electronics company has two contract manufacturers in Asia: Foxconn assembles its tablets and Flextronics assembles its laptops. Monthly demand for tablets is 10,000 units, whereas that for laptops is 4,000. Tablets cost the company $100, laptops cost $400, and the company has a holding cost of 25 percent annually. Currently the company has to place separate orders with Foxconn and Flextronics and receives separate shipments. The fixed cost of each shipment is $10,000.

1. What is the optimal order size and order frequency when orders are placed separately for Foxconn and Flextronics?

2. The company is considering combining all assembly with the same contract manufacturer. This will allow for a single shipment of all products from Asia. If the fixed cost of each shipment remains $10,000,

3. what is the optimal order frequency (number of annual orders)

4. what is the optimal order size for the combined orders? You need to determine the optimal order size for each product.

5. How much of a reduction is cycle inventory can the company expect as a result of combining orders and shipments?

6. What is the Annual savings from using a single shipment (joint replenishment) approach?

Reference no: EM132303694

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