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Inputs
Holding cost, H = $ 0.15 per unit and day
TL costs from plants to DCs = $ 0.09 per unit
LTL costs from DC to customers = $ 0.10 per unit
TL costs from plants to central whse. = $ 0.05 per unit
LTL cost from central whse. to cust. = $ 0.24 per unit
Reorder Interval, T = 6 days
Lead Time, L = 5 days
Target cycle service level, CSL = 0.95
Correlation Coefficient = 0
Outputs
Cycle stock and required safety stock by part and region Cycle stock and required safety stock by part and region in days of demand
Region 1 Region 2 Region 3 Region 4 Region 5 All Regions Region 1 Region 2 Region 3 Region 4 Region 5 All Regions
Part 1Cycle Inventory 106.44 67.83 52.98 35.43 10.08 272.76 Part 1Cycle Inventory 3.00 3.00 3.00 3.00 3.00 3.00
Part 1 SS 38.08 35.35 28.70 18.98 24.49 145.60 Part 1 SS 1.07 1.56 1.62 1.61 7.29 1.60
Part 3 Cycle Inventory 7.44 12.45 18.45 18.48 22.47 79.29 Part 3 Cycle Inventory 3.00 3.00 3.00 3.00 3.00 3.00
Part 3 SS 17.24 33.82 34.86 36.88 19.42 142.22 Part 3 SS 6.95 8.15 5.67 5.99 2.59 5.38
Part 7 Cycle Inventory 1.44 2.19 2.40 5.82 7.62 19.47 Part 7 Cycle Inventory 3.00 3.00 3.00 3.00 3.00 3.00
Part 7 SS 10.80 7.75 13.04 20.51 21.71 73.81 Part 7 SS 22.50 10.61 16.30 10.57 8.55 11.37
Inputs
Holding cost, H = $ 0.15 per unit and day
TL costs from plants to DCs = $ 0.09 per unit
LTL costs from DC to customers = $ 0.10 per unit
TL costs from plants to central whse. = $ 0.05 per unit
LTL cost from central whse. to cust. = $ 0.24 per unit
Reorder Interval, T = 6.00 days
Lead Time, L = 5.00 days
Target cycle service level, CSL = 0.95
Correlation Coefficient = -
Outputs
Cycle stock and required safety stock by part and region
Region 1 Region 2 Region 3 Region 4 Region 5 All Regions Central
Part 1Cycle Inventory 106.44 67.83 52.98 35.43 10.08 272.76 272.73
Part 1 SS 38.08 35.35 28.70 18.98 24.49 145.60 66.96
Part 3 Cycle Inventory 7.44 12.45 18.45 18.48 22.47 79.29 79.29
Part 3 SS 17.24 33.82 34.86 36.88 19.42 142.22 66.28
Part 7 Cycle Inventory 1.44 2.19 2.40 5.82 7.62 19.47 19.47
Part 7 SS 10.80 7.75 13.04 20.51 21.71 73.81 35.20
Cost Savings from Centralization as a function of the correlation coefficient and target cycle service level
0.92
0.93
0.94
0.95
0.96
0.97
0.98
0.99
0.91
0.92
0.93
0.94
0.95
0.96
0.97
0.98
0.99
0.91
0.92
0.93
0.94
0.95
0.96
0.97
0.98
0.99
0.91
0.92
0.93
0.94
0.95
0.96
0.97
0.98
0.99
Inputs
Holding cost = $ 0.15 per unit and day daily demand at NDC 982.9
TL costs from plants to DCs = $ 0.09 per unit annual demand at NDC 358758.5
LTL costs from DC to customers = $ 0.10 per unit
TL costs from plants to central whse. = $ 0.05 per unit
LTL cost from central whse. to cust. = $ 0.24 per unit
Reorder Interval = 6 days
Lead Time = 5 days
Target cycle service level = 0.95
Correlation Coefficient = 0
Outputs
Cycle stock and required safety stock by part and region
Region 1 Region 2 Region 3 Region 4 Region 5 Central
Part 1Cycle Stock 106.44 67.83 52.98 35.43 10.08
Part 1 SS 38.08 35.35 28.70 18.98 24.49
Part 3 Cycle Stock 79.29
Part 3 SS 66.28
Part 7 Cycle Stock 19.47
Part 7 SS 35.20
Correlation Cofficient
$765,064 0.00 0.25 0.50 0.75 1.00
0.9
Target Cycle Service Level
0.91
0.92
0.93
0.94
0.95
0.96
0.97
0.98
0.99
Inputs
Holding cost, H = $ 0.15 per unit and day
TL costs from plants to DCs = $ 0.09 per unit daily demand at NDC 454.3
LTL costs from DC to customers = $ 0.10 per unit annual demand at NDC 165819.5
TL costs from plants to central whse. = $ 0.05 per unit
LTL cost from central whse. to cust. = $ 0.24 per unit
Reorder Interval, T = 6 days
Lead Time, L = 5 days
Target cycle service level, CSL = 0.95
Correlation Coefficient = 0
Outputs
Cycle stock and required safety stock by part and region
Region 1 Region 2 Region 3 Region 4 Region 5 Central
Part 1Batch Stock 106.44 67.83 52.98 35.43 10.08
Part 1 SS 38.08 35.35 28.70 18.98 24.49
Part 3 Batch Stock 7.44 12.45 18.45 18.48 22.47
Part 3 SS 17.24 33.82 34.86 36.88 19.42
Part 7 Batch Stock 19.47
Part 7 SS 35.20
Correlation Cofficient
$828,921 0.00 0.25 0.50 0.75 1.00
0.9
Target Cycle Service Level
0.91
0.92
0.93
0.94
0.95
0.96
0.97
0.98
0.99
Inputs
Holding cost, H = $ 0.15 per unit and day
TL costs from plants to DCs = $ 0.09 per unit
LTL costs from DC to customers = $ 0.10 per unit
TL costs from plants to central whse. = $ 0.05 per unit
LTL cost from central whse. to cust. = $ 0.24 per unit
Reorder Interval, T = 6 days
Lead Time, L = 5 days
Target cycle service level, CSL = 0.95
Correlation Coefficient = 0
Outputs
Cycle stock and required safety stock by part and region
Region 1 Region 2 Region 3 Region 4 Region 5 Central
Part 1Batch Stock 106.44 67.83 52.98 35.43
Part 1 SS 38.08 35.35 28.70 30.99
Part 3 Batch Stock 79.29
Part 3 SS 66.28
Part 7 Batch Stock 19.47
Part 7 SS 35.20
$ 205,162 24.1%
$ 195,262 30.0%
$ 131,405 43.8%
$ 208,612 34.8%