Question 1: (38 points) The Prompt Corporation purchases product from two suppliers, A and B. Supplier A is located in Austin, TX, and supplier B in Carthage, TN. Supplier A supplies component a and supplier B supplies component b. These components are used to make gizmos of two types, 1 and 2. Gizmo 1 is made in Helena, MT (Plant 1) and Gizmo 2 is made in Duluth, MN (Plant 2). Manufacturing plants make gizmos according to daily demand and one Gizmo 1 requires 1 unit of componenta and one Gizmo 2 requires 1 unit of component b. Demand per day for Gizmo 1 is distributed normally with a mean of 175 and a standard deviation of 100. Demand per day for Gizmo 2 is distributed normally with a mean of 330 and a standard deviation of 200. Prompt Corporation follows a faced order quantity inventory policy fi.e., fored Q). Here is a brief sketch of the supply chain system of Prompt Corporation Supplier A Supplier B Where Carth Th What Component What Componenta Plant 1 Where Helena MT Plant 2 175/day - 100/day Home - 330/day - 200/day Page 1 of 2 SCM 403: Homework Assignment 5 Due: May 6, 2020 Currently, loads are shipped fulltruckload from suppliers directly to plants. These trucks have a capacity of 500 units. Transit time between Supplier A and Plant 1 is 3 days while the transit time between Supplier Band Plant 2 is 2 days. The costs of trucks per truckload shipped are $2,500 to Plant 1 and $1,500 to Plant 2. Holding cost per component per day is $0.8. Assume the Prompt Corporation aims 90% service level, 1 year has 360 days and there are 30 days per month (a) Provide the annual total supply chain costs for this system. Please note that total supply chain costs equal to annual holding cost plus annual transportation costs. Annual holding cost is a function of pipeline stock, cycle stock, and safety stock. (18 points (b) Prompt has realized that it can obtain larger trucks with a capacity of 1,000 units for a cost of 54,500 to Plant 1 and 52,600 to Plant 2 with the same transit times for each route, if Prompt has these trucks, should all shipments be full truck load or less-than-fulltruckload? What will be the associated annual total supply chain costs to use these trucks with the appropriate level of loads on these trucks? Are the costs lower than part (a)? Explain why or why not? (20 points) Question 1: (38 points) The Prompt Corporation purchases product from two suppliers, A and B. Supplier A is located in Austin, TX, and supplier B in Carthage, TN. Supplier A supplies component a and supplier B supplies component b. These components are used to make gizmos of two types, 1 and 2. Gizmo 1 is made in Helena, MT (Plant 1) and Gizmo 2 is made in Duluth, MN (Plant 2). Manufacturing plants make gizmos according to daily demand and one Gizmo 1 requires 1 unit of componenta and one Gizmo 2 requires 1 unit of component b. Demand per day for Gizmo 1 is distributed normally with a mean of 175 and a standard deviation of 100. Demand per day for Gizmo 2 is distributed normally with a mean of 330 and a standard deviation of 200. Prompt Corporation follows a faced order quantity inventory policy fi.e., fored Q). Here is a brief sketch of the supply chain system of Prompt Corporation Supplier A Supplier B Where Carth Th What Component What Componenta Plant 1 Where Helena MT Plant 2 175/day - 100/day Home - 330/day - 200/day Page 1 of 2 SCM 403: Homework Assignment 5 Due: May 6, 2020 Currently, loads are shipped fulltruckload from suppliers directly to plants. These trucks have a capacity of 500 units. Transit time between Supplier A and Plant 1 is 3 days while the transit time between Supplier Band Plant 2 is 2 days. The costs of trucks per truckload shipped are $2,500 to Plant 1 and $1,500 to Plant 2. Holding cost per component per day is $0.8. Assume the Prompt Corporation aims 90% service level, 1 year has 360 days and there are 30 days per month (a) Provide the annual total supply chain costs for this system. Please note that total supply chain costs equal to annual holding cost plus annual transportation costs. Annual holding cost is a function of pipeline stock, cycle stock, and safety stock. (18 points (b) Prompt has realized that it can obtain larger trucks with a capacity of 1,000 units for a cost of 54,500 to Plant 1 and 52,600 to Plant 2 with the same transit times for each route, if Prompt has these trucks, should all shipments be full truck load or less-than-fulltruckload? What will be the associated annual total supply chain costs to use these trucks with the appropriate level of loads on these trucks? Are the costs lower than part (a)? Explain why or why not? (20 points)