Logistics presentation
Transcript: - inventory carrying costs 20% per annual including acquisition and transportation cost - bear extra $2,800 for holding cost ($0.40 extra per unit of dome light) - to cover up the cost, he has to buy them below $4 - so, at what price shall he buy ? - $4-$0.40=$3.60 - thus, he might buy the dome lights below $3.60 to gain profit from it * Total inventory maintenance cost per year = $1,292,824.00 Closer = 1 week Question 6: If the JIT system is adopted, what changes, if any, should occur in the relationships between Jim’s firm and his suppliers of components? Discuss. - Lesser stocks - Lesser holding costs - More orders - Buy when needs, small shipments rather than a few large ones - Defect in stock, extra costs For current system, The total annual cost of JIT system > Current system Safety Stock JIM might not buy because this action would undermine the principle of JIT system as it did not include safety stock (inventories). Higher unit cost and freight charges. Presented by Lim : 1) Sin Yee 2) Soon Yik 3) Hui Xin For Just In Time system, * Total inventory maintenance cost per year = $1,151,522 Question 1: What is the total annual cost of maintaining the components inventory under the present system? JIT System = $1,292,824 > 500 miles = 4 weeks Question 3: Should Jim take into account any other costs or benefits from the JIT system? If so, what are they? Question 4: If the JIT system is adopted, are there safety stocks of any item that should be maintained? If so, which ones, and how much? Average number used per week. Case 3-2 JUST-IN-TIME IN KALAMAZOO Question 5: Assume that Jim has switched to the JIT system and that he receives a surprise phone call from a competitor who is going out of business. The competitor wants to sell Jim 7,000 dome lights, should he buy them? If so, at what price? Mini Motor Home Summary Question 2: What would be the total annual cost of maintaining the components inventory under the JIT system (assuming no safety stocks)? - No sufficient information - Yes if there is demand variability case Refrigerator Awning bracket - Depends on the average distance from vendor - Same as current system Current system = $1,151,522 - better collaboration and discipline in terms of : * (i) lower defect from delivery or totally free from defects * (ii) prompt delivery - Fewer orders - Buy in bulk - Lower freight costs - More stocks - More holding costs - Case study: Kalamazoo, manufactures mini motor home - expanded from local firm to national firm - more supply needed - present system (Jim Ballenger) vs JIT system - which system to choose? Between 100 - 500 miles = 2 weeks YES! - number of ordering times - number of holding stocks - holding costs