An electronics company has two contract manufacturers in Asia: Foxconn assembles

Question

An electronics company has two contract manufacturers in Asia: Foxconn assembles its tablets and Flextronics assembles its laptops. Monthly demand for tablets is 10,000 units, whereas that for laptops is 4,000. Tablets cost the company $100, laptops cost $400, and the company has a holding cost of 25 percent. Currently the company has to place separate orders with Foxconn and Flextronics and receives separate shipments. The fixed cost of each shipment is $10,000.

For all questions that follow, round your answers to two (2) decimal places.

A- What is the optimal order size with Foxconn?

B- What is the optimal order size with Flextronics?

C- What is the average flow time for tablets in days?

D- What is the average flow time for laptops in weeks?

Explanation / Answer

OPTIMAL ORDER SIZE =   [sqrt{2AB/C}]

A = ANNUAL QUANTITY

B = FIXED COST

C = HOLDING COST

A) For FOXCONN optimal order size = [sqrt{2*120000*10000/25} = 9797.96] units

A = 10000 units * 12 months

B = $10000

C = 25% of $100

B) FOR FLEXTRONICS optimal order size = [sqrt{2*48000*10000/100} = 3098.40] units

A = 4000 units * 12 months

B = $10000

C = $100

C) NUMBER OF ORDER CYCLE IN A YEAR WITH FOXCONN IS = [120000/9797.96 = 12.25 times]

IN DAYS = 365/12.25 = 29.80 days is the order cycle for foxconn

D) NUMBER OF ORDER CYCLE IN A YEAR WITH FLEXTRONICS =   [48000/3098.4 = 15.50 times]

IN WEEKS = 52/15.5 = 3.35 week is the order cycle for flextronics

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