Question

Monczka-Trent Shipping is the logistics vendor for Handfield Manufacturing Co. in Ohio. Handfield has daily shipments of a power-steering pump from its Ohio plant to an auto assembly line in Alabama. The value of the standard ship- ment is $250,000. Monczka-Trent has two options:
(1) its stand- ard 2-day shipment or
(2) a subcontractor who will team drive overnight with an effective delivery of one day. The extra driver costs $175. Hadfield’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?

Answer 1

Answer:

Explanation:

Base on the scenario been described in the question, Monczka-Trent Shipping is the logistics vendor for Handfield Manufacturing Co. in Ohio. Hpower-steering pump from its Ohio plant to anauto assembly line in Alabama. The value of tMonczka-Trent has two options: (1) its standard 2-day shipment or (2) a subcontractor who effective delivery of one day. The extra driver costs $175. Handfield’s holding cost is 35% a The benefit to subcontractor the work where the team will drive overnight with an effective delivery of 1 day =The production issue that has not been included in the above data is that the auto assem Alabama is getting its input from the Ohio plant of power steering pump, thus any cha delivery pattern i.e. changing the duration of shipment might affect the workings of th1 day shipment may lead to over stocking at the assembly line. The delay in transit timproduction issues where this part or component is used. These issues could be related tdevelopment, quality or testing of a product. It could also affect the production processlevels. All of these could cause potential delays in production.