A luxury Soap Company based in England sells to the Ireland market annually with all different types of soaps. The annual demand for these soaps in Ireland is normally distributed, with an average of 1090 pallets and a standard deviation of 182 pallets.

One box of luxury soap is worth 6720. The holding charge is 20% annually, andthe company includes the shipment cost when calculating inventory costs.

It costs 500 to process the required paperwork to export the soap, independently of the volume shipped. The Luxury Soap Company's cycle service level target is 90%.

The Luxury Soap Company has been shipping the boxes of soap by boat. It takes 7 days to deliver soap to Ireland using this type of shipment. The entire shipment cost of this option is 450 per box.

The Luxury Soap Company is currently considering shipping its soap by pLANE. This new shipment would take 5 days and would cost 600 per box.

In both scenarios, the Luxury Soap Company would ship in batches of 28 boxes. The Luxury Soap Company owns the soap until it is delivered at the Ireland retailers' warehouses.

George has been hired to analyze both shipment options and help the Luxury Soap Company make the best decision to minimize the entire cost. For planning purposes, George considers that 1 year has 350 days.

Q1

Calculate the cycle stock cost associated with each shipment option:

• Cycle stock cost if shipping by Boat.

Round your answer to the nearest integer.

Cycle stock cost if shipping by Plane

Round your answer to the nearest integer.

Q2

Calculate the safety stock cost associated with each shipment:

• Safety stock cost if shipping by Boat

Round your answer to the nearest integer.

• Safety stock cost if shipping by Plane

Round your answer to the nearest integer.

Q3

Calculate the pipeline inventory cost associated with each shipment:

• Pipeline inventory cost if shipping by Boat

Round your answer to the nearest integer.

• Pipeline inventory cost if shipping by Plane

Round your answer to the nearest integer.

Q4

Based on George's analysis, George recommends that the Luxury Soap Company should use the plane to ship their Luxury Soap to Ireland. However, after talking with the owner of the Luxury Soap Company, George learns that there is actually some lead time variability when delivering by plane due to the uncertain availability of employees to load and unload the boxes at the airport.

• Re-calculate the entire cost (cycle stock + safety stock + pipeline inventory) associated with the plane shipment considering that the lead time is average 5 days with a standard deviation of 3 days.

Round your answer to the nearest integer.