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Logistics Stat321 and Project Management Tutorial 12 (week 13) EXERCISE 1 Your options for shipping $100,000 of machine parts from Baltimore to Kuala Lumper, Malaysia are (a) a ship that will take 30 days at a cost of $3,800, or (b) truck the parts to LA and then ship at a total cost of $4,800. This will take 20 days. You are paid via a letter of credit the day the parts arrive. Your holding cost is estimated at 30% of the value per year. (a) Which option is more economical? (b) What customer issues are not included in the data presented? (c) If you have the third option that costs only $4,000 and also takes 20 days, what is your most economical plan? (a) Since the daily holding cost ($82.20) is less than the daily cost of faster shipping with option b ($100), use the slower shipping, option a. (b) Implications of added in -transit time to the customer: delivery of this product or of a major product of which this is a component may have repercussion well beyond the cost savings and a very unhappy (c) customer. use the faster shipping, option a EXERCISE 2 MaxiFast Shipping is the logistics vendor for Meticulous Manufacturing Company in Gundagai. Meticulous has daily shipments of a power-steering pump from its Gundagai plant to an auto assembly line is Brisbane. The value of the standard shipments is $250,000. MaxiFast Shipping has two options: 1) its standard 2-day shipment or 2) a subcontractor who will drive overnight with an effective delivery of 1 day. The extra driver costs $175. Meticulous's holding cost is 35% annually for this kind of inventory. (a) Which option is more economical? (b) What production issues are not included in the data presented? (a) Since the daily holding cost ($239.73) is more than the cost of faster shipping ($175), use the faster sub-contractor. (b) Implications of added in-transit time to the production process: potential delay in activity for which the component is destined (new product development, quality test, the production process, etc.). ... View Full Document

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