Should Packaging Be Postponed to the DC?
30%
0.95
9 weeks
0
2.00$
Unit Cost
Weekly Demand Mean SD Mean SD Mean SD
Target 1000 700 2000 1000 4000 1000
Best Buy 700 600 1500 800 4500 900
Office Max 800 600 1200 600 2000 700
Staples 500 400 900 500 1400 500
Aggregate
Demand
3,000 1,170 5,600 1,500 11,900 1,597
Safety Stock with Labeling and Packaging in Malaysia
Computers Printers Scanners
Target 3,454 4,935 4,935
Best Buy 2,961 3,948 4,441
Office Max 2,961 2,961 3,454
Staples 1,974 2,467 2,467
Total 11,349 14,310 15,297
Holding cost of safety stock 5,151,682$
Computers Printers Scanners
Safety Stock 5,776 7,402 7,880
Annual Labeling and Packaging Cost Increase on Postponement
1,000$
300$
100$
Computers
Printers
Scanners
Increase in cost/unit on postponement
Lead time =
CSL =
Holding cost =
Correlation coefficient
Q1: the answer is given in Cell C24
Q2: The answer is given in Cell D32. To change the
correlation coefficient, change Cell D5
Q3: Compare the gains in inventory in Cell A32:C32
to the increase in labeling and packaging cost in
Cells A36:C36.