Weekly demand for motors is normally distributed with a mean of 1500 and a standard deviation of (1009). Motors are currently assembled in Taiwan and delivered at a cost of (1927)$/motor. The supplier takes four weeks to supply an order. A domestic manufacturer has offered to supply motors with a lead time of 1.5 weeks on average at a cost of (2159)$/motor. The motor manufacturer is targeting a CSL of 99.5 percent and monitors its inventory continuously. The manufacturer incurs a holding cost of 30%. Should the manufacturer accept the local supplier's offer?
Weekly demand for motors is normally distributed with a mean of 1500 and a standard deviation of (1009). Motors are currently assembled in Taiwan and delivered at a cost of (1927)$/motor. The supplier takes four weeks to supply an order. A domestic manufacturer has offered to supply motors with a lead time of 1.5 weeks on average at a cost of (2159)$/motor. The motor manufacturer is targeting a CSL of 99.5 percent and monitors its inventory continuously. The manufacturer incurs a holding cost of 30%. Should the manufacturer accept the local supplier's offer?
Purchasing and Supply Chain Management
6th Edition
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Chapter16: Lean Supply Chain Management
Section: Chapter Questions
Problem 10DQ: The chapter presented various approaches for the control of inventory investment. Discuss three...
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![Weekly demand for motors is normally distributed with a mean of 1500 and a standard deviation of
(1009). Motors are currently assembled in Taiwan and delivered at a cost of (1927)$/motor. The supplier
takes four weeks to supply an order. A domestic manufacturer has offered to supply motors with a lead
time of 1.5 weeks on average at a cost of (2159)$/motor. The motor manufacturer is targeting a CSL of
99.5 percent and monitors its inventory continuously. The manufacturer incurs a holding cost of 30%.
Should the manufacturer accept the local supplier's offer?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa4d78298-4983-4a63-8ab7-2f05cefa7de4%2F1a43fd7a-07a8-40b5-b28c-bce1412e05a9%2Fcl1pob2_processed.png&w=3840&q=75)
Transcribed Image Text:Weekly demand for motors is normally distributed with a mean of 1500 and a standard deviation of
(1009). Motors are currently assembled in Taiwan and delivered at a cost of (1927)$/motor. The supplier
takes four weeks to supply an order. A domestic manufacturer has offered to supply motors with a lead
time of 1.5 weeks on average at a cost of (2159)$/motor. The motor manufacturer is targeting a CSL of
99.5 percent and monitors its inventory continuously. The manufacturer incurs a holding cost of 30%.
Should the manufacturer accept the local supplier's offer?
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