Consider a supply chain, which contains a single manufacturing facility, a cross dock and two retail outlet. Items are shipped from the manufacturing facility to the cross-dock facility and from there to the retail outlets. Let L 1 be the lead time from the factory to the cross-dock facility and L 2 be the lead time from cross-dock facility to each retail outlet. Let L = L 1 + L 2, in the following analysis below , we fixed L, and vary L 1 and L . a. Compare the amount of safety stock in two systems, one in which lead time from cross-dock facility to retail outlet is zero(i.e., L 1 = L, L 2 = 0) and a second system in which the lead time from the factory to the cross-dock facility is equal to zero (i.e., (L 1 = 0, L 2 = L). b.To reduce safety stock, should the cross-dock facility be closer to the factory or the retail outlet? For this purpose analyze the impact of increasing L 1 and therefore decreasing L 2 on total safety stock. 10) Suppose you are selecting a supplier. Would you prefer a supplier with a short but highly variable delivery lead time or a supplier with a longer but less variable lead time? 11) Although we typically model inventory-related costs as either fixed or variable, in the real world the situation is more complex. Discuss some inventory-related costs that are fixed in the short term but may be considered variable if a longer time horizon is considered.
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