Quantitative practice problems Supply Chain Management-case Exercise
Quantitative practice problems Supply Chain Management Transportation HP produces printer components in the US and ships them for final assembly to Europe. The European plant is running at a fixed rate, and needs 7000 units of the component per week. The HP plant in the US produces JIT, and holds no inventory at the factory beyond what is being produced for a current order. The company needs 1 week to finish the production of these 7000 units, which are then shipped out immediately by sea transport. The transportation time takes usually 4 weeks, though delay can occur at the ports. Due to these time delays, the lead-time demand is variable, with a standard deviation of lead time demand being 3000 units, and the European plant holds enough inventory to cover such delays 99% of the time. Part (i): What is the total annual inventory holding cost of this supply chain, if the per unit holding cost is 50 Euro cents? (For simplicity, assume the same inventory holding c...