Homework Help is Here – Start Your Trial Now!
Business
Operations Management
Joburg Logistics (JL), a distributor of various products Polokwane receives their products from suppliers Durban, Cape Town, and Johannesburg. The company' management is concerned with the supply cost of certain product that is supplied by a manufacturer i Durban. Currently JL has a contract with Transnet Freigh Rail (TFR) for the transport of the orders from Durban. The following are the rail rate and transit time: Transit time (rail) Rail rate 5 days R2.75/unit

Joburg Logistics (JL), a distributor of various products Polokwane receives their products from suppliers Durban, Cape Town, and Johannesburg. The company' management is concerned with the supply cost of certain product that is supplied by a manufacturer i Durban. Currently JL has a contract with Transnet Freigh Rail (TFR) for the transport of the orders from Durban. The following are the rail rate and transit time: Transit time (rail) Rail rate 5 days R2.75/unit

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
See similar textbooks
icon
Related questions
Question
Joburg Logistics (JL), a distributor of various products in Polokwane receives their products from suppliers in Durban, Cape Town, and Johannesburg. The company's management is concerned with the supply cost of a certain product that is supplied by a manufacturer in Durban. Currently JL has a contract with Transnet Freight Rail (TFR) for the transport of the orders from Durban. The following are the rail rate and transit time: Transit time (rail) Rail rate 5 days R2.75/unit The impact on the transport and inventory carrying cost because of this arrangement is a concern of the logistics director, Mrs Micky. As a result, Mrs Micky has requested the logistics manager to evaluate the option to use a 3PL service provider for the shipment from Durban to Johannesburg. The logistics manager has identified a certain 3PL company that has the capacity to perform this contract. However, in order to provide a transport rate, the 3PL company required the size and frequency of orders. JL currently uses the EOQ approach to determine the order size and based on this the 3PL company has provided the following transport rates: EOQ Order 100 units Transport rate (Rand/unit) 3.50 3.10 Transit time (days) 3 1 The logistics manager has obtained the following information: Annual demand (units) Product value (Rand/unit) Inventory carrying cost Order cost In-transit inventory carrying cost Which option would you recommend that GP use? (Hint: Assume 360 days/annum. Comparison of the possible options should be based on TAC) 1 000 R650 20% R35 12%
Transcribed Image Text:Joburg Logistics (JL), a distributor of various products in Polokwane receives their products from suppliers in Durban, Cape Town, and Johannesburg. The company's management is concerned with the supply cost of a certain product that is supplied by a manufacturer in Durban. Currently JL has a contract with Transnet Freight Rail (TFR) for the transport of the orders from Durban. The following are the rail rate and transit time: Transit time (rail) Rail rate 5 days R2.75/unit The impact on the transport and inventory carrying cost because of this arrangement is a concern of the logistics director, Mrs Micky. As a result, Mrs Micky has requested the logistics manager to evaluate the option to use a 3PL service provider for the shipment from Durban to Johannesburg. The logistics manager has identified a certain 3PL company that has the capacity to perform this contract. However, in order to provide a transport rate, the 3PL company required the size and frequency of orders. JL currently uses the EOQ approach to determine the order size and based on this the 3PL company has provided the following transport rates: EOQ Order 100 units Transport rate (Rand/unit) 3.50 3.10 Transit time (days) 3 1 The logistics manager has obtained the following information: Annual demand (units) Product value (Rand/unit) Inventory carrying cost Order cost In-transit inventory carrying cost Which option would you recommend that GP use? (Hint: Assume 360 days/annum. Comparison of the possible options should be based on TAC) 1 000 R650 20% R35 12%
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps with 2 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Practical Management Science
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,
Operations Management
Operations Management
Operations Management
ISBN:
9781259667473
Author:
William J Stevenson
Publisher:
McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi…
Operations and Supply Chain Management (Mcgraw-hi…
Operations Management
ISBN:
9781259666100
Author:
F. Robert Jacobs, Richard B Chase
Publisher:
McGraw-Hill Education
Business in Action
Business in Action
Operations Management
ISBN:
9780135198100
Author:
BOVEE
Publisher:
PEARSON CO
Purchasing and Supply Chain Management
Purchasing and Supply Chain Management
Operations Management
ISBN:
9781285869681
Author:
Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:
Cengage Learning
Production and Operations Analysis, Seventh Editi…
Production and Operations Analysis, Seventh Editi…
Operations Management
ISBN:
9781478623069
Author:
Steven Nahmias, Tava Lennon Olsen
Publisher:
Waveland Press, Inc.
SEE MORE TEXTBOOKS