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Sourcing Motors. Located in central France, Laurence Garreau's firm supplies a parti- cular electric motor to the automobile industry. These motors need housing, and Laurence

Sourcing Motors. Located in central France, Laurence Garreau's firm supplies a parti- cular electric motor to the automobile industry. These motors need housing, and Laurence is trying to find a supplier for these housings. Laurence has received two quotations. The first is from a firm in Asia. The unit price per housing is 67 Euro. The transit time from Asia is 25 days. The second quotation is from a company in North America. This Ame- rican firm offers to price the housing at 69 Euro /unit. It will take only 5 days to deliver the housings. Assume that the Garreau's firm works 7 days a week 50 weeks per year, and the daily requirement of the housing is normally distributed with a mean of 200 units and a standard deviation of 80 units. Laurence intends to hold safety stock to meet a 99% service level. The annual holding cost of the housing is 35% of its price. Also, by conven- tion, the French firm pays for the housing the moment they are shipped. All housings are ordered and shipped jointly every Monday (no other days are possible). Evaluate each of the two proposals to determine which is the most economical alternative. What is your recommendation ? (Be specific and show all of your calculations.)

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