Assignment task:
Apple has two contract manufacturers in Asia. Foxconn assembles its iPhones while Flextronics assembles its iPads. The annual demand for iPhones is 15,000 units while that for iPads is 5,000. The cost of iPhones is $400 while iPads cost $100 and the company has a holding cost of 25 percent. Currently, Apple places separate orders and receives separate shipments. The fixed cost per order is $5,000. What is the optimal order size and order frequency for iPhones and iPads? What is the total annual holding order costs? Apple is thinking of consolidating the two suppliers. This will allow for a single shipment of all products from Asia. If the combined fixed order cost increased to $7,000 per order after consolidation, what is the optimal order frequency and order size for iPhones and iPads?