XYZ sоurces а wire kit frоm twо vendors (M аnd G) аnd has decided to change to a sole source strategy. The weekly demand of the wire kit is 300 units with a standard deviation of 100 units. The target service level is 99.99% (Z = 3.72) and the holding cost rate is 35%. Assume 52 weeks per year. Vendor M sells the wire kit at $53/unit, has ordering costs of $500 and has a lead time of 2 weeks with a negligible (=0) standard deviation of lead time (they always deliver on time). They use their own trucks to deliver, and the transportation cost is included in the price. Base the analysis on EOQ as the reordering amount. Vendor G sells the wire kit at $50/unit and has ordering costs of $400. Transportation is not included in the price. Given the annual demand volume and current costs, it is proposed that TL shipping is best. A TL shipment fits a maximum of 3,000 units and each TL shipment costs $4,000. The lead time from this vendor using TL shipping is 3 weeks with a standard deviation of 1.5 weeks. Base the analysis on the annual frequency that maximizes the use of the TL (in other words, the smallest F where a shipment can fit one TL), remembering that Q = D/F. Perform a cost analysis. Provide the total costs per year for vendor M and for vendor G that include purchasing, holding, ordering, safety stock, and transportation as applicable. Make a recommendation that includes the selected vendor to sole source, the reorder quantity and the reorder point. Provide the following answers here but be sure to upload all your work after the exam. Be sure to type only the number with no commas nor dollar sign. Selected Vendor: [vendor] (type only the letter in caps) Total annual cost of vendor M: [m_costs] Total annual cost of vendor G: [g_costs] Recommended reorder quantity: [Q] Recommended reorder point: [R]
Whаt benefits dо FTZs prоvide tо businesses, аnd how do they contribute to cost reduction аnd operational agility? Discuss potential drawbacks and the strategic considerations companies should take into account when utilizing FTZs.