(1) The Andrades company a widget that consists of three different components (labeled A,B and C) from three plants into an assembled final product in their plant in Boise, Idaho. Each widget had 1 unit of A, two units of B and three units of C in its assembly. Component A is produced in Wausau, Indiana, component B is produced in Cincinnati, Ohio and component C is produced in Champaign. Illinois.
The production rate at Boise is 200 widgets per day. Components are shipped full truckload from the component plants to the assembly plant, with a truck capacity of 3600 units. The holding cost at Boise is $ 0.4/unit/day - this is the holding cost charged to all in transit inventory. The transport cost per truckload and travel time from the component plants to Boise are provided below
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Boise
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Cost/truckload
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Lead time
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Wausau
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3000
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4
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Cincinnati
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4000
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5
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Champaign
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3000
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4
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(1 a) Provide the total transport costs per day, in transit inventory holding costs and cycle stock holding costs per day for the supply chain. Provide the total logistics costs. Given this system, which cost is minimized?
(1 b) Suppose the shipments in (1 a) were replaced with optimal loads. Provide the associated optimal loads, and the corresponding transport costs, in transit inventory costs and cycle stock costs per day across the supply chain. Provide the total logistics costs and compare it to (1 a). Is it larger or smaller, and which components change, explain.
(1 c) A consultant suggests replacing the individual trucks with a peddling route that collects all the components from the three plants every four days and delivers the product to the assembly plant. The amount picked up per component location is the demand at Boise for three days for each of the components. Suppose the lead time for the route is 6 days, truck capacity is 4800 units and the transport cost per truckload is $ 4500. Provide the corresponding transport costs, in transit inventory costs and cycle stock costs per day across the supply chain. Provide the total logistics costs.
(1 d) Another option suggested is to open a consolidation warehouse in Kansas City, Kansas. All component plants would ship full truckloads to this consolidation warehouse. Every three days a truck would travel to the assembly plan and deliver the components required to satisfy three days of demand at Boise. The holding cost for the warehouse in Kansas City is $ 0.2/unit/day. All other holding costs remain $ 0.4/unit/day. Provide the corresponding transport costs, in transit inventory costs and cycle stock costs per day across the supply chain. Provide the total logistics costs
(1 e) Which one of the options (1a) through (1 d) would you suggest for COLLATE - explain why?