Additional Information : •A backorder costs Pines Industries $10 per item. •Stor
ID: 433994 • Letter: A
Question
Additional Information
:
•A backorder costs Pines Industries $10 per item.
•Storing an item at the warehouse costs $2 per item per month.
•Based on training and severance, there is a one-time $2000 cost for
hiring a worker and a $3000 for firing a worker due to production. Based
on these costs, what can you assume? You can arbitrarily set the worker
count on 1 January based on your production line estimation from the
previous month.
•The GCP 3000 and 4000 are high end machines retailing between $8000
and $10000 based on the market. What does that tell you?
Questions
Given the product structure, what is your ordering strategy for
vendor-procured items for 2019?
Problem Definition: Pines Industries wants to introduce a new and improved Green Chile Processor, the Pines GCP 4000, to replace the popular GCP 3000. Due to demand projections, the GCP 3000 will be out of stock on I January 2019 and will be immediately replaced by the GCP 4000. As the head production engineer, the CEO tasked you to provide a recommendation on production scheduling, workforce planning, and warchousing in order to scamlessly replace the GCP 3000 with the GCP 4000 in January 2019. This recommendation is due no later than 2 ?ugust 2018 via NMSU Canvas. Product Forecast: Pincs industrics sells the GCP 3000 worldwide with most sales in the Northern Hemisphere. The CEO assumes that GCP 3000 sales over the previous 24 months to be the best forecasting tool for GCP 4000 sales in the first 12 months following introduction. Monthly sales for the past 24 months are as follows: 2017 2018 January10167 9614 February 10279 10325 March 10106 10107 9896 9596 9807 9596 10182 9896 24819 25348 25141 25050 May Junc July August September 19697 20016 October November 9993 10066 December 9986 9919 19882 19665 What trends do you see in the previous sales demands? Why? Product Structure:The GCP 4000 is similar to the GCP 3000, but requires completely new components. Components A, B, and C are assembled in house, but D, E, and F are sourced from vendors with the following shipment times:Explanation / Answer
Answer:
Ordering strategy for vendor procured items for 2019:
The aim of the ordering strategy is as below
On time availability of parts for production and avoid any delay due to parts.
Lowest possible storage and holding cost.
Keep safety stock to manage the uncontrolled variations in the ordering and supply chain process and ensure that production is not affected due to non-availability of parts.
Lowest ordering cost for the organization.
Lowest supply chain cost for the organization.
The ordering strategy for the vendor procured items for 2019 will be as such
The ordering strategy will be developed for the vendor procured parts such as D, E & F parts.
The ordering strategy will be based on the lead time of the parts i.e. D-two weeks, E-one week and F-one week.
Ordering strategy will be based on the monthly volume consumption of parts or as per forecasted demand.
Ordering strategy will be based on optimum ordering quantity concept which ensures the lowest cost of order management, lowest inventory management cost, lowest holding cost and lowest supply chain cost.
Ordering strategy will ensure that there is no inventory accumulation and will not have adverse impact on the material cost for the organization.
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