Note:(1) Use shipping cost $5,000 each time from Malaysia to DC in St. Louis.(2) Total inventory cost = purchase cost + order cost + holding cost = D*c+ (D/Q)*S + (SS+Q/2)*h*c, where Q should be the optimal order quantity if you want to have the minimum total inventory cost.

LT: 9 weeks

Costs: $1,000/computer $100/scanner $300/printer

Holding cost: 30%

Total Inventory Cost in Malaysia: $313,601,938

1) How would the inventory cost change if labeling and packing were moved to the Dist. Center? Assuming the demands are independent of each other.

[Solution: $311,653,500]

2) How should Penang Electronics set up it's production, labeling, and packing processes if the cost would be $2 more per unit? Does your answer change if the additional cost of labeling and packaging at the DC is increased to $4(from the current value of $2)?

Distribution of Weekly Demand by Product and Customer Printers TABLE 12-9 Scanners Computers SD Mean 4,000 1,000 4,500 2,000 1,400 SD Target Best Buy Office Max Staples Mean 1,000 700 800 500 SD 700 600 600 400 Mean 2,000 1,500 1,200 900 1,000 800 600 500 900 700 500 Distribution of Weekly Demand by Product and Customer Printers TABLE 12-9 Scanners Computers SD Mean 4,000 1,000 4,500 2,000 1,400 SD Target Best Buy Office Max Staples Mean 1,000 700 800 500 SD 700 600 600 400 Mean 2,000 1,500 1,200 900 1,000 800 600 500 900 700 500