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 240,000 units while that for laptops is 60,000. 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.

Essentials of Business Analytics (MindTap Course List)

2nd Edition

ISBN:9781305627734

Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Chapter11: Linear Optimization Models

Section: Chapter Questions

Problem 8P: Photon Technologies, Inc., a manufacturer of batteries for mobile phones, signed a contract with a...

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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 240,000 units while that for laptops is 60,000. 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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