Kamalazoo Case Study

Vivek

International l Logistics 351

Dr. Howard

Case Study: Just-In Time In Kalamaazo

1. What is the total annual cost of maintaining the components inventory under the present system?

Current system

Item | Average distance from vendor (in miles) | Number of units used each week | Current lot size purchased | Unit cost | Average freight cost per unit |

Gas range | 1,145 | 10 | 200 | $100 | $20 |

Toilet | 606 | 10 | 240 | $80 | $18 |

Pump | 26 | 56 | 125 | $16 | $3 |

Refrigerator (large) | 22 | 6 | 120 | $110 | $20 |

Refrigerator (small) | 22 | 7 | 15 | $95 | $15 |

Foam cushion | 490 | 675 | 1,500 | $8 | $2 |

CB radio(type D) | 1,800 | 9 | 24 | $136 | $11 |

Dome lights | 3 | 824 | 1,720 | $2 | None |

Awning bracket | 48 | 540 | 1,200 | $4 | $1 |

Insect screen | 159 | 570 | 1,240 | $7 | $1 |

Current system (continued)

Item | Safety stock | Average inventory | Total inventory | Inventory cost | Inventory carrying charges | Inventory maintenance cost |

Gas range | 40 | 100 | 140 | $62,400 | $3,360 | $65,760 |

Toilet | 40 | 120 | 160 | $50,960 | $3,136 | $54,096 |

Pump | 56 | 63 | 119 | $55,328 | $450 | $55,778 |

Refrigerator (large) | 6 | 60 | 66 | $40,560 | $1,716 | $42,276 |

Refrigerator (small) | 7 | 8 | 15 | $40,040 | $319 | $40,359 |

Foam cushion | 1,350 | 750 | 2,100 | $351,000 | $4,200 | $355,200 |

CB radio (type D) | 36 | 12 | 48 | $68,796 | $1,411 | $70,207 |

Dome lights | 824 | 860 | 1,684 | $85,696 | $674 | $86,370 |

Awning bracket | 540 | 600 | 1,140 | $140,400 | $1,140 | $141,540 |

Insect screen | 1,140 | 620 | 1,760 | $237,120 | $2,816 | $239,936 |

Total inventory maintenance cost per year = $1,151,522

Using JIT

Item | JIT lot size | Unit cost | Average freight cost per unit (surface) | Inventory maintenance cost |

Gas range | 10 | $105 | $22 | $66,040 |

Toilet | 10 | $100 | $18 | $61,360 |

Pump | 7 | $15 | $4 | $55,328 |

Refrigerator (large) | 6 | $113 |...