ATK-Auto obtains one of the critical parts from its sub-constructor located in Belgium. Daily demand at the production plant in Poland is normally distributed, with a mean of 2100 and a standard deviation of 450 units. The target CSL is 95 percent. The company is considering two different modes of transportation from Belgium: Sea or Air. Sea transportation results in a lead time of 30 days and costs $1.5 per part. Air transportation results in a lead time of 4 days and costs $8.50 per part. Each part costs $350 and ATK-Auto uses a holding cost of 25 percent. Given the minimum lot sizes, ATK would order 11,000 parts at a time if using sea transport and 400 parts at a time if using air transport. Assume that ATK pays for the parts when the order is placed. a. Assuming that ATK follows a continuous review policy, what reorder point and safety inventory should the warehouse aim for when using sea or air transportation? b. How many days of cycle inventory does ATK carry under each policy? c. Which policy (sea or air) would you recommend to ATK to minimize total cost (transportation and inventory carrying costs)? d. Does your answer change ( with c ) if ATK pays for the parts when they receive the products at their production plant?
Critical Path Method
The critical path is the longest succession of tasks that has to be successfully completed to conclude a project entirely. The tasks involved in the sequence are called critical activities, as any task getting delayed will result in the whole project getting delayed. To determine the time duration of a project, the critical path has to be identified. The critical path method or CPM is used by project managers to evaluate the least amount of time required to finish each task with the least amount of delay.
Cost Analysis
The entire idea of cost of production or definition of production cost is applied corresponding or we can say that it is related to investment or money cost. Money cost or investment refers to any money expenditure which the firm or supplier or producer undertakes in purchasing or hiring factor of production or factor services.
Inventory Management
Inventory management is the process or system of handling all the goods that an organization owns. In simpler terms, inventory management deals with how a company orders, stores, and uses its goods.
Project Management
Project Management is all about management and optimum utilization of the resources in the best possible manner to develop the software as per the requirement of the client. Here the Project refers to the development of software to meet the end objective of the client by providing the required product or service within a specified Period of time and ensuring high quality. This can be done by managing all the available resources. In short, it can be defined as an application of knowledge, skills, tools, and techniques to meet the objective of the Project. It is the duty of a Project Manager to achieve the objective of the Project as per the specifications given by the client.
ATK-Auto obtains one of the critical parts from its sub-constructor located in Belgium. Daily demand at the production plant in Poland is
a. Assuming that ATK follows a continuous review policy, what reorder point and safety inventory should the warehouse aim for when using sea or air transportation?
b. How many days of cycle inventory does ATK carry under each policy?
c. Which policy (sea or air) would you recommend to ATK to minimize total cost (transportation and inventory carrying costs)?
d. Does your answer change ( with c ) if ATK pays for the parts when they receive the products at their production plant?
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