Logistic and supply chain management. Need to aswer question 1 and 3 in - Case Study Example

This information will be used to compute the annual cost for each customer type. Table 1 indicates that each of MoonChem’s 12 small customers uses chemical amounting to 12,000kg per annum. This means that they receive only one (1) shipment per annum. This stock will last them for three years and three months. It therefore means that a shipment is made once every three years. However, there are consignment costs and holding costs to be considered. Table 2 provides information on these costs. Table 2 indicates that the annual cost to MoonChem of sending full truck-loads to small customers is $604,800.

$4,800 of this total relates to transportation, $120,000 to holding costs (calculated as 25% of consignment cost), and the largest portion of $480,000 relating to consignment costs. Table 1 indicates that there are six (6) medium sized customers, each of whom consumes 5,000kg of chemicals per month. The total usage for each of these customers is 30,000kg per annum. This indicates that only one shipment is required for each medium customer per annum. Table 3 provides a breakdown of the annual cost of sending full truck-loads to these customers.

Table 3 indicates that two (2) truck-loads of inventory would be required for medium customers per annum. The transportation cost of sending these two (2) truck-loads of chemicals to medium-sized customers is $14,400 per annum, consignment cost $480,000 and holding cost $120,000 per annum. The table also indicates that the total cost of sending full truck-loads of chemicals to medium customers is $614,400. Information in the Table 1 indicates that there are two large customers, each of whom consumes 12,000kg of chemicals per month which suggests an annual consumption for each member of this customer group of 144,000kg of chemical per annum.

It therefore means that a total of 288,000kg of chemicals is being consumed by this particular group of customers. Table 4 indicates that the total annual cost of sending full