Motorola sources cell phones from its contract manufacturer located in China to serve the US market, which is served from a warehouse located in Memphis, Tennessee. The daily demand at the Memphis warehouse is normally distributed, with a mean of 5,000 and a standard deviation of 4,000. The deposit is aimed at a 99% NSC. The company is debating whether to use sea or air transport from China. Shipping by sea results in a 36-day lead time and costs $0.50 per phone. Air transport results in a four-day waiting time and costs $1.50 over the phone. Each phone costs $100, and Motorola uses a 20% maintenance cost. Given the minimum lot sizes, Motorola would order 100,000 phones at a time (on average, once every 20 days) if using ocean freight, and 5,000 phones at a time (on average, daily) if using air freight. To begin with, suppose Motorola appropriates the inventory on delivery. What is the best option for cell phone delivery and the respective total cost of the best choice? [ ]$3,559,716.00 [ ]Maritime Transport [ ]$6,629,147.00 [ ]$ 3,759,251.00 [ ]Air Transport [ ]$5,259,859.00
Motorola sources cell phones from its contract manufacturer located in China to serve the US market, which is served from a warehouse located in Memphis, Tennessee. The daily demand at the Memphis warehouse is
[ ]$3,559,716.00
[ ]Maritime Transport
[ ]$6,629,147.00
[ ]$ 3,759,251.00
[ ]Air Transport
[ ]$5,259,859.00
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