Operations Management: Processes and Supply Chains (12th Edition) (What's New in Operations Management)
12th Edition
ISBN: 9780134741062
Author: Lee J. Krajewski, Manoj K. Malhotra, Larry P. Ritzman
Publisher: PEARSON
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Textbook Question
Chapter 12, Problem 9P
A large global automobile manufacturer is considering outsourcing the manufacturing of a solenoid used in the transmission of its SIJVs. The company estimates that annual fixed costs of manufacturing the part in-house, which include equipment, maintenance, and management, amounts to $6 million. The variable costs of labor and material are $5.00 per unit. The company has an offer from a major subcontractor to produce the part for $8.00 per unit. However, the subcontractor wants the company to share in the costs of the equipment. The automobile company estimates that the total cost would be $4 million, which also includes management oversight for the new supply contact.
- How many solenoids would the automobile company need per year to make the in-house option least costly?
- What other factors, besides costs, should the automobile company consider before revising its supply chain for SUVs?
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Students have asked these similar questions
Following are some of the information on demand and costs of a mobile phone manufacturer:
Monthly Sales for previous year were 10,000 Mobile Phones. Overall Market has grown at 15% from the previous year. The company uses a third-party storage solution for keeping its inventory. The charges are Rs. 100/unit. For procuring the raw material company relies on a contractor which provides them a one stop solution and charges Rs. 3000 per order. The actual cost of the raw material is approximately 7000/unit.
Using the above given information answer the following questions?
What is the Economic Order Quantity for the company?
If a working year is 300 days find out how many orders the company will place for the current year and what would the gap between two orders?
What will be the total cost of inventory policy for the company?
If the delivery lead time for receiving the order is 20 days what should be the reorder point for the company?
A manufacturing company has entered into a new contract with a major supplier of raw materials used in the manufacturing process. Under the new arrangement, called vendor managed inventory, the supplier manages its raw material inventory inside the manufacturer’s plant, and only bills the manufacturer when the manufacturer consumes the raw material. How is this likely to affect the manufacturer’s inventory turnover ratio?
Samsung Electronics is trying to reduce supply chain risk by making more responsible make-buy decisions
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Chapter 12 Solutions
Operations Management: Processes and Supply Chains (12th Edition) (What's New in Operations Management)
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