CASE Assignment: Nittany Fans
Nittany Fans of Lewistown, Pennsylvania, is a distributor of industrial fans used in plants, warehouses, and other industrial facilities. Its market area encompasses most of Pennsylvania, eastern Ohio, and New Jersey. The fans are manufactured in Neenah, Wisconsin, and currently shipped to Lewistown via rail transportation. Kenny Craig, vice president of logistics, has asked his staff to evaluate using motor carrier service to ship the fans.
Nick Gingher, director of distribution, has collected the following information:
• Annual demand: 36,000 fans
• Fan value (price): $4,000 each
• Inventory carrying cost (annual): 25%
• Cost per order to replenish inventory: $200
• In-transit inventory carrying cost: 15%
• Order cycle time using rail: 4 days
• Order cyde time using motor carrier: 2 days
• Rail rate $1.00 per cwt (100 lbs.)
• Motor carrier rate $1.25 per cwt
• Unit weight: 250 lbs. per fan
CASE QUESTIONS
1. What is the economic order quantity for Nittany Fans in units? In pounds?
2. What is the total cost (not considering transportation-related costs) of the EOQ?
3. What is the total cost for using rail transportation?
4. What is the total cost for using motor carrier transportation?
5. Which alternative should Nittany Fans use?
Format your assignment according to the following formatting requirements:
1. The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also includes a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
3. Also include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.