cost Will tive cost will increase by 10 per cent. 16 ons for 300 days a year. . Operatio 2. Inventory carrying costs 22 per cent. 6260 Work out the viability of the project. PART B 3. Motorola obtains cell phones from its contract manufacturer located in China to serve the U.S. market. The U.S. market is served from a warchouse located in Memphis, Tennessee. Daily demand at the Memphis warehouse is normally distributed, with mean of 5,000 and a standard deviation of 4,000. The warehouse aims for a service level (CSL) of 99 percent The company is debating whether to use sea or air transportation from China. Sea transportation results in a lead time of 36 days and costs $0.50 per phone. Air transportation results in al time of 4 days and costs $1.50 per phone. Each phone costs $100, and Motorola uses a holding cost of 20 percent. Given the minimum lot size, Motorola would order 100,000 phones at a time, if using sea transport and 5,000 phones at a time, if using air transport. To begin with, assume that Motorola takes ownership of the inventory on delivery Assume that Motorola follows a continuous review policy for managing inventory. Value of -Term t12018 2o1 6 lead least ive handing t Z statistic corresponding to 0.99 probability in standard normal distribution table is 2.33 a) What safet options of transportation -(i) sea or (ii) air? y stock and reorder point should the warehouse aim for when using the two (Marks: 3+3) Marks: 3) (Marks: 2+2) e answer b) How many days of inventory to be kept under safety inventory in each of the two cases? icipant's ) What would be the Average Inventory per annum in each of the two cases? d) Compare between two transportation options considering all relevant costs and decide on the best option of transportation of cell phones from China. (Marks: 8) Marks Secured 4. A white good manufacturer is considering the selection of either Cross-Docking or traditional Hub and Spoke distribution network. Give your comments on pros and cons, and applicability of each of the two options of distribution. (Marks: 4) Till now imanhash maintaining four local warehouses, each catering to demands