You are the new operations manager for the Northeast regional distribution center (RDC) of office supply retailer StapleMax. The distribution center (DC) you mange is located in Carlisle, PA. You have been asked by your new boss, the VP of Logistics, to evaluate inventory replenishment options for a set of stock-keeping units (SKUs) supplied by a particular technology products wholesaler. These items are shipped to the StapleMax DC via a series of intermodal transfers. The goods are all manufactured in Asia and arrive in the United States at the port of Long Beach, CA, where they are moved, still containerized, via rail to the inland port of Kansas City, KS, where the wholesalers break-bulk center is located. The goods are ultimately moved from the wholesalers facility in Kansas City to StapleMaxs DC in Carlisle via truck.

StapleMaxs freight terms with the wholesaler are DDU*which means F.O.B. destination (i.e., Carlisle), with StapleMax paying the freight bill for the truck shipments from Kansas City to Carlisle. Currently, the four items supplied by the wholesaler all ship independently from Kansas City to the Carlisle DC, some via TL and some via LTL. Important logistics-related data and product-related data appear in Tables 4.13 and 4.14.

Given the current replenishment policy information, what is the inventory cycle length, in days, for each of the four items? (See Chapter 3, if necessary, for more information on computing the inventory cycle length.)

Given the problem data and your answers to part (a) given earlier, which items do you believe to be good candidates to consider shipping jointly via truckload from Kansas City to Carlisle? Why?

For the items you chose in part (b) given earlier, compute a trial joint-shipment solution. Your solution should specify the shipment quantity (in units or cases, as appropriate) for each item in the joint solution, and the overall total annual cost of this joint shipment. (See Chapter 3 for more information on setting up a total annual cost function for a two-item, joint shipment solution.)

Do you believe that your solution to part (c) given earlier is an optimal joint-shipment solution? If yes, explain what makes it so. If no, explain the steps you would need to take in order to generate the optimal joint-shipment solution for these items.

TABLE 4.13 Logistics Data for Exercise 4.12 Cost to receive an order in the DC Annual on-site holding cost (% of item value) Shipment distance Truckload shipment rate Truckload weight capacity Truckload volume capacity Operating days per year $20/item/shipment 35% 1008 miles $2.00/mile 25 ton 3200 ft 365 days TABLE 4.14 Product Data for Exercise 4,12 Item Item Annual Weight Volume Shipment Shipment Freight Mode Charge (ft3) 1.25 5.19 435 units 3.13 1022 units TL 0.67 48 cases Item Demand Item Cost(lb) Slimline PC 4000 units $400/unit19 Laser printer 2600 units $160/unit 34 16 1200 cases $150/case 10 Size $445 $%2016 $2016 $186 LTL TL 72 units Inkjet printer 6000 units $60/unit Wireless LTL mouse (case of 10) TABLE 4.13 Logistics Data for Exercise 4.12 Cost to receive an order in the DC Annual on-site holding cost (% of item value) Shipment distance Truckload shipment rate Truckload weight capacity Truckload volume capacity Operating days per year $20/item/shipment 35% 1008 miles $2.00/mile 25 ton 3200 ft 365 days TABLE 4.14 Product Data for Exercise 4,12 Item Item Annual Weight Volume Shipment Shipment Freight Mode Charge (ft3) 1.25 5.19 435 units 3.13 1022 units TL 0.67 48 cases Item Demand Item Cost(lb) Slimline PC 4000 units $400/unit19 Laser printer 2600 units $160/unit 34 16 1200 cases $150/case 10 Size $445 $%2016 $2016 $186 LTL TL 72 units Inkjet printer 6000 units $60/unit Wireless LTL mouse (case of 10)