At what inventory level the order for new lot of granules should be placed

Supply Chain Management
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Supply Chain Management
1. A group of NMIMS alumni have started a new e-commerce company and they are
expecting to serve only 5 cities- Delhi, Mumbai, Bangalore, Kolkata and Hyderabad.
Each parcel they ship to their customers in these cities weighs between 200 grams and
400 grams. They negotiated with a courier company for shipping their parcels and the
best rates they got for all parcels up to 0.5 kg are given in below table:
For processing their orders and storing the inventory, they need a 10000 sq ft
warehouse. The rental cost in Mumbai is Rs. 20 per sqft. whereas the rent in Delhi is Rs.
8.5 per sqft. All other costs of operating the warehouse is same for both the cities. The
group has to decide if they should have a warehouse in Delhi or in Mumbai to keep their
costs to minimum. (10 Marks)
Q 2. Case Study/ Caselet Prime Plastics Pvt. Ltd. is a company based out of Mumbai, India.
They produce vials using LDPE (Low Density Polyethylene) granules. Granules are
imported from a plant in Germany which dispatches the goods on the same day when
order is received. The shipments are made through sea and the transportation lead
time is 45 days. Once the granules are received, the company tests the goods in their
inhouse lab and only after that, the granules are used for making vials. Testing time for
granules is 15 days. On an average company uses 24 metric tons of granules every
month. However the business development team of the company has informed that any
day they can receive new orders and the consumption of granules can go up to 30
metric tons.
a.) How much safety stock of granules should the company maintain (5 Marks)
b.) At what inventory level the order for new lot of granules should be placed. (5 Marks)
[email protected]
[email protected]
+91 95030-94040
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