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3. A computer manufacturer ships partially assembled computers (hereafter called units) from an assembly plant in Thailand to a distribution center in Oregon. We want
3. A computer manufacturer ships partially assembled computers (hereafter called units) from an assembly plant in Thailand to a distribution center in Oregon. We want to determine if it is more economical to ship in 35ft containers by ocean carriers or In airline containers by air carriers. Shipment by ocean costs $8,000 per container, and a 35ft container can hold 6,000 units. Handling cost is $1,000 per 35ft container. The iourney by sea takes 28 days on average. Shipment by air costs $24,000 per container, and an airline container can hold 3,000 units. Handling cost is $1,200 per airline container. Thejoumey by air takes 3 days on average (door to door). The forecasted demand is 180,000 units for the next year, which is also the planned production quantity. No safety stock is kept at the assembly plant, and a shipment is sent to the distribution center as soon as a container is lled. Safety stock of 2,500 units is kept at the distribution center. A unit is valued at $600 at the assembly plant and $700 at the distribution center. The inventory holding cost rate is estimated at 20% of value per year. The space cost is estimated as $40 / unit I year at the assembly plant and $70 I unit / year at the distribution center. (a) What are the annual inventory holding costs at the assembly plant? (Include the space and holding cost in this calculation.) (b) What are the annual inventory holding costs at the distribution center? (Include the space and holding cost in this calloulatiOn.) (c) What are the pipeline inventory costs for each mode? (d) What are the setup costs for each mode? (Don't forget to take the shipment & handling cost into consideration when calculating these costs.) (e) What are the total cost equations for each mode of transportation? (i) Assume that the shipper will always ship full loads. Determine the most economical transportation service to use in this case. (g) Now assume that the shipper may use less than full loads. Deten'nlne the most economical transportation service to use in this case. (This means that you want to nd the optimal shipment size for each mode but remember to take the container restrictions into consideration.) (h) What parameter changes would make the other mode of transportation (not the one chosen in part (gii more economical, and thus the best choice? You do not need to do the calculations just discuss what parameters would need to be adjusted
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