Question
Weekly demand for electric motors at a motor manufacturer is normally distributed, with a mean of 1,000 and a standard deviation of 900. Motors are
Weekly demand for electric motors at a motor manufacturer is normally distributed, with a mean of 1,000 and a standard deviation of 900. Motors are currently assembled and delivered in China at a cost of $20,000 per motor. The supplier takes six weeks to supply an order. A local supplier has offered to deliver motors with a lead time of one week at a cost of $20,400 per motor. The motor manufacturer is targeting a CSL of 95 percent and monitors its inventory continuously. The manufacturer incurs an annual holding cost of 25 percent. Should the manufacturer accept the local suppliers offer?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started