Problem 3: Late Deliveries Lead time (days) = 14 Price per unit = $125 Net cost per unit = $75 Inventory carrying cost = 30% Cost of capital = 15% Demand per day (units) = 2000 in-transit inventory carrying cost-18% Current Service Level * 50% are on time * 20% are 1 day late * 15% are 3 days late * 10% are 6 days late * 5% are 9 days late
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Expert Answer
Q9. 15.02 days
Current average delay = .5*0+.2*1+.15*3+1*6+.05*9 = 1.7 days
40% improvement = 1.7*.4 = 0.68
Average delay now = 1.7-.68 = 1.02
Average lead time = 14+1.02
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