An electronics company has two contract manufacturers in Asia. Foxconn assembles its tablets and smart phones while Flextronics assembles its laptops. Monthly demand for tablets and smartphones is 20,000 units while that for laptops is 5,000. Tablets cost the company $200 while laptops cost $500 and the company has a holding cost of 25 percent. Currently the company has to place separate orders with Foxconn and Flextronics and receives separate shipments. The fixed cost of each shipment is $20,000. Answer the following question: a. What is the optimal order size and order frequency with each of Foxconn and Flextronics. Draw inventory profile for each product? Consider the following changes and answer the questions below The company is thinking of combining all assembly with the same contract manufacturer. This will allow for a single shipment of all products from Asia. b. If the fixed cost of each shipment remains $??? (As modified by you), what is the optimal order frequency and order size from the combined orders? c. Compare the annual total cost of separate and jointly ordering strategy? d. Define a shipment capacity that would be violated by size of combined orders, then adjust the amount of 2 orders regarding that capacity and calculate the annual total cost.

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter3: Introduction To Optimization Modeling

Section3.8: A Multiperiod Production Model

Problem 21P

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An electronics company has two contract manufacturers in Asia. Foxconn assembles its tablets and smart phones while Flextronics assembles its laptops. Monthly demand for tablets and smartphones is 20,000 units while that for laptops is 5,000. Tablets cost the company $200 while laptops cost $500 and the company has a holding cost of 25 percent. Currently the company has to place separate orders with Foxconn and Flextronics and receives separate shipments. The fixed cost of each shipment is $20,000. Answer the following question: a. What is the optimal order size and order frequency with each of Foxconn and Flextronics. Draw inventory profile for each product? Consider the following changes and answer the questions below The company is thinking of combining all assembly with the same contract manufacturer. This will allow for a single shipment of all products from Asia. b. If the fixed cost of each shipment remains $??? (As modified by you), what is the optimal order frequency and order size from the combined orders? c. Compare the annual total cost of separate and jointly ordering strategy? d. Define a shipment capacity that would be violated by size of combined orders, then adjust the amount of 2 orders regarding that capacity and calculate the annual total cost.

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