Assuming a service level of 99% for all parts, what will be the impact on the total inventory investment if the number of wareho
uses is reduced from 8 warehouses to 2? Reduced to 1? Assume that each of the 8 warehouse has roughly equal demand and, when consolidating the warehouses, the total demand across all 8 warehouses is equally divided between the remaining warehouses. A. Using data from the case, complete the table below. Note that Exhibit gives the standard deviation of the bi-weekly demand for 8, 2, and 1 warehouses respectively. Use these values to calculate the Stdev of weekly demand.
Product Griffin Beaker Erlenmeyer Flask
# of Warehouses 8 2 1 8 2 1
Z-Value 2.33 2.33 2.33 2.33 2.33 2.33
Calculations Average
for 1 warehouse Weekly
Demand
Stdev of
Weekly
Demand
POU (weeks)
Q
Average Pipeline
Inventory
Begin on hand
SS
Average On Hand
Average Inventory
Total Average Inventory
(all warehouses)
Calculate the percentage savings in total average Inventory investment from warehouse consolidation for each product. Assume lead time stays constant at 1 week:
from 8 warehouses to 2 warehouses.
from 8 warehouses to 1 warehouse.
Take a simple average of the percent savings for each part and apply the resulting average percent savings to the entire North American finished goods (NA FG) inventory. Assume 2010 NA FG is $5 million. Calculate the total savings for the NA FG if:
8 warehouses are consolidated to 2 warehouses.
8 warehouses are consolidated to 1 warehouse.
Would savings from consolidation compensate for the expected increase in inventory of $1.5 million if:
8 warehouses are consolidated to 2 warehouses?
8 warehouses are consolidated to 1 warehouse?
Griffin 500ml Beaker Erlenmeyer 500ml Flask
2009 units sold 11,268 3,389
Percent of all units sold 0.1% 0.03%
Annual carrying cost (%) 14% 14%
Unit price $8.80 $9.50
Unit cost $3.96 $4.56
Cost of underage $0.48 $0.49
Cost of overage $0.021 $0.025
Optimal service level 95.8% 95.3%
Average bi-weekly demand
(8 warehouses) 54.2 16.3
Standard deviation of bi-
weekly demand
(8 warehouses) 21.4 10.9
Average bi-weekly demand
(2 warehouses) 216.7 65.2
Standard deviation of bi-
weekly demand
(2 warehouses) 38.3 19.5
Average bi-weekly
demand (1 warehouse) 433.4 130.3
Standard deviation of bi-
weekly demand
(1 warehouse) 51.0 26.0
The answer and procedures of the exercise are attached in the following archives.
Explanation
You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.
John's reaction is an example of the bystander effect. It means that he will just continue staring at the accident because he is curious as to what happened and he wants to see how the event is resolved, however, he is not really willing to do anything to help the people involved - he will just assume someone else will do that.
The company must create brand recognition and open new branches to access greater number of customers.
Explanation:
Ofcourse having a brand recognition means that the company is oriented towards developing its image that plays a vital role in making choices and this is only possible if its products are widely available in the market by openning new branches and offering other branches to present your products. This will lead to access of product to greater amount of public and greater the number of people will choose Magnira's products.
