15.6 Demand
avg/week 100
sd/week 50
Holding cost 25%
CSL 0.95
Supplier 1: Reliable Supplier 2: Value
Cost/unit $5,000 Cost/unit $4,800
min batch 100 min batch 800
Lead time (wks) 1 Lead time (wks) 4
SD of Lead Time (wks) 0.1 SD of Lead Time (wks) 3
Material cost $26,000,000 Material cost $24,960,000
Avg cycle inv 50 Avg cycle inv 400
Cycle inv cost $62,500 Cycle inv cost $480,000
SD (dem over lead time) 50.99 SD (dem over lead time) 316.23
Safety inv 83.87 Safety inv 520.15
Safety inv cost 104,839$ Safety inv cost 624,178$
Total cost 26,167,339$ Total cost 26,064,178$
Option Total Cost
LT = 4 26,373,828.55$
min batch = 800 26,259,790.75$
SD of LT = 3 26,191,932.07$
All three 26,064,178.01$
Change these cells to evaluate
different options