This section moves from math to decision-making frameworks regarding suppliers and transportation.
EOQ=2×12,000×503=1,200,0003=400,000=632.45 unitscap E cap O cap Q equals the square root of the fraction with numerator 2 cross 12 comma 000 cross 50 and denominator 3 end-fraction end-root equals the square root of the fraction with numerator 1 comma 200 comma 000 and denominator 3 end-fraction end-root equals the square root of 400 comma 000 end-root equals 632.45 units (Round to the nearest whole unit: ) Calculate Total Costs: Annual Ordering Cost: Annual Holding Cost: Total Relevant Cost: Part 3: Case-Based Essay Question supply chain management midterm exam questions
Hypothesis 1: Fuel arbitrage. The ship diverted to a non-union bunkering port in Ensenada, Mexico, to take on cheaper heavy fuel oil, betting that the $150,000 saved outweighs the 18-hour delay. Impact on Ohio: The JIT factory’s safety stock of wiring harnesses (held at a cross-dock in Chicago) covers exactly 18 hours. Any longer, and the line stops. Cost per minute of downtime: $12,000. This section moves from math to decision-making frameworks
Midterm professors love to give daily demand but annual holding costs. Always convert your time units (days to weeks to years) so they match before plugging numbers into EOQ or forecasting formulas. Impact on Ohio: The JIT factory’s safety stock
SS=z×σL=1.645×24=39.48≈40 unitscap S cap S equals z cross sigma sub cap L equals 1.645 cross 24 equals 39.48 is approximately equal to 40 units