Data

Griffin Erlenmeyer
2009 units sold 11268 3389
Carrying cost (%) 14% 14%
Unit price ($) 8.8 9.5
Unit cost ($) 3.96 4.56
lbs/case 0.75 3
Units/case 6 12
Avg. Bi-weekly demand (8 WH) 54.2 16.3
Std dev bi-weekly demand (8 WH) 21.4 10.9
Avg. Bi-weekly demand (2 WH) 216.7 65.2
Std dev bi-weekly demand (2 WH) 38.3 19.5
Avg. Bi-weekly demand (1 WH) 433.4 130.3
Std dev bi-weekly demand (1 WH) 51 26
Bulk shipping cost ($/lbs) 0.4 0.4
Target service level (%) 99% 99%
z-value 2.33 2.33
Lead time (days) 5 5
Re-order cycle (days) 14 14
Shipment cost ($/10 lbs)
Centralized warehousing 23.6 23.6
Decentralized warehousing 20.6 20.6
Outsourcing 26.25 26.25
 order cost per unit
Griffin Erlenmeyer
lbs/unit 0.125 0.25
order cost($/unit) 0.05 0.1

Hodling and order cost

Griffin Erlenmeyer
8 WH Out sourcing 1 WH 8 WH
Annual demand 11268 11268 11268 3389
Avg. Bi-weekly demand 54.2 216.7 433.4 16.3
weekly demand 27.1 108.35 216.7 8.15
Unit cost 3.96 3.96 3.96 4.56
Holding cost ($) 0.55 0.55 0.55 0.64
Order cost ($) 1.36 5.42 10.84 0.82

Total annual cost

Griffin Erlenmeyer
8 WH Out sourcing 1 WH 8 WH
EOQ 234.7 469.3 663.7 93.0
Avg Inventory 117.3 234.6 331.8 46.5
Avg Inv holding cost 65.1 130.1 184.0 29.7
Orders/year 48.0 24.0 17.0 36.4
Annual order cost 65.1 130.1 184.0 29.7
Total annual cost per warehouse 130.1 260.2 367.9 59.4
Total annual cost 1040.9 520.3 367.9 475.1

Total safety stock & reorder level

Griffin Erlenmeyer
8 WH Out sourcing 1 WH 8 WH
Lead time demand 19.4 77.4 154.8 5.8
Std dev during lead time 7.6 13.7 18.2 3.9
Safety stock 17.8 31.9 42.4 9.1
Total safety stock 142.46286 63.742142857 42.439286 72.563
Reorder level 37.2 109.3 197.2 14.9
Total Reorder level 297.3 218.5 197.2 119.1

Shipping & Total cost

Griffin Erlenmeyer
8 WH Out sourcing 1 WH 8 WH
Weight of yearly demand 1408.5 1408.5 1408.5 847.25
Cost of shipping 2901.5 3697.3 3324.1 1745.3
Total potential cost 3942.4 4217.6 3692.0 2220.4
 Erlenmeyer
Out sourcing 1 WH
3389 3389
65.2 130.3
32.6 65.15
4.56 4.56
0.64 0.64
3.26 6.52

Erlenmeyer Inferences:
Out sourcing 1 WH
186.0 263.0 1. Since one central warehouse option has the lea
93.0 131.5 products, therefore it is recommended. Though th
59.4 84.0 WH option, it becomes insignificant because of m
inventory cost.
18.2 12.9
59.4 84.0 2. When the demand is aggregated across multipl
118.8 167.9 the demand decreases and therefore the re-order
237.5 167.9 lowest for one central warehouse option.

Erlenmeyer
Out sourcing 1 WH
23.3 46.5
7.0 9.3
16.2 21.6
32.453571429 21.635714
39.5 68.2
79.0 68.2

Erlenmeyer
Out sourcing 1 WH
847.25 847.25
2224.0 1999.5
2461.6 2167.4
ehouse option has the least annual cost for both the
ecommended. Though the shipping cost is higher than 8
significant because of much higher savings from

ggregated across multiple regions, the uncertainity in

nd therefore the re-order level and safety stock is
rehouse option.