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    Venkateswaran S
    The document compares the total costs of transporting two types of products, smartphones and decorative hardware, from China to another location using either air freight or ocean shipping. It provides transportation and product details, calculates optimal batch sizes and inventory levels, and determines the annual holding and shipping costs and total costs for each transportation and product combination.

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    Venkateswaran S
    14 views4 pages
    The document compares the total costs of transporting two types of products, smartphones and decorative hardware, from China to another location using either air freight or ocean shipping. It provides transportation and product details, calculates optimal batch sizes and inventory levels, and determines the annual holding and shipping costs and total costs for each transportation and product combination.

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    The document compares the total costs of transporting two types of products, smartphones and decorative hardware, from China to another location using either air freight or ocean shipping. It provides transportation and product details, calculates optimal batch sizes and inventory levels, and determines the annual holding and shipping costs and total costs for each transportation and product combination.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    14 views4 pages

    SCM

    Uploaded by

    Venkateswaran S
    The document compares the total costs of transporting two types of products, smartphones and decorative hardware, from China to another location using either air freight or ocean shipping. It provides transportation and product details, calculates optimal batch sizes and inventory levels, and determines the annual holding and shipping costs and total costs for each transportation and product combination.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
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    Selecting Transportation Modes for China Imports

    Desired cycle service level 98%


    Holding cost 25%

    Transportation Options
    Air freight Ocean shipping
    Shipping cost / kg. $ 10 Shipping cost / container $ 1,200
    Minimum shipping quantity (kg.) 50 Container size (kg.) 15000
    Mean lead time (weeks) 1 Mean lead time (weeks) 9
    SD of lead time (weeks) 0.2 SD of lead time (weeks) 3
    Ordering Cost Per Order $ 500 Ordering Cost Per Order $ 1,200

    Product Characteristics
    Smartphones Decorative hardware
    Mean weekly demand 1,000 Mean weekly demand 5,000
    SD of weekly demand 400 SD of weekly demand 1,000
    Weight / unit (kg.) 0.1 Weight / unit (kg.) 1
    Cost / unit $ 300.0 Cost / unit $ 20
    Annual Demand 52000 Annual Demand 260000
    Unit Holding Cost $ 75.0 Unit Holding Cost $ 5.0

    Total Costs for Smartphones


    Air freight Ocean Shipping
    Optimal batch size 833 1290
    Order quantity per batch 833 1290
    Cycle inventory 416 645
    Safety inventory 918 6,636
    Transit inventory 1,000 9000
    Total inventory 2335 16281
    Annual holding cost $ 175,110 $ 1,221,063
    Annual shipping cost $ 52,000 $ 416
    Total Costs $ 227,110 $ 1,221,479

    Total Cost for Decorative Hardware


    Air freight Ocean Shipping
    Optimal batch size 7211 11171
    Order quantity per batch 7211 11171
    Cycle inventory 3,606 5,586
    Safety inventory 2,904 31,416
    Transit inventory 5,000 45,000
    Total inventory 11,510 82,002
    Annual holding cost $ 57,550 $ 410,010
    Annual shipping cost $ 2,600,000 $ 20,800
    Total Costs $ 2,657,550 $ 430,810
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