China Managed Float

In: Business and Management

Submitted By kulwinder
Words 734
Pages 3
Managing the Supply Chain - A Case Study

Like many producers of computer peripheral devices, Digitprint Ltd. subcontracted manufacturing of its low-cost, high volume products to firms in China for subsequent shipment to distribution centers in Asia, Europe and North America. Digitprint’s logistics Manager was exploring options to improve both the cost and timeliness of Digitprint’s supply chain for a standard product, a basic laser printer. Moreover, he felt that any improvements for this product line likely could be applied to other product lines.

For this printer, the supply chain was quite straightforward. Digitprint routinely had containerized shipments dispatched every two weeks from the subcontractor’s manufacturing plant, with the order size depending on the existing inventory levels in the North American warehouse. Demand for the product averaged 150 cases per week with a standard deviation of approximately 15 cases per week (each case contained one dozen printers and weighs 24 pounds). Because of poor transportation infrastructure in China, export and import customs-related delays and Digitprint’s desire to minimize shipping costs, the printers typically arrived 10 weeks later at the North American distribution center. The total cost of manufacturing was approximately $90 per printer. Senior management had adopted a general guideline of applying an annual carrying charge of 25% to all inventories to reflect shrinkage, obsolescence and opportunity costs.

Currently emergency shipments are a flown in at a cost of $54.00 per pound weight/measure.
Each emergency case has the following dimensions: length - 1.5 feet, width- 2 feet, height 2.5 feet.

The subcontractor was responsible for the procurement of most standard parts, with these parts being shipped directly from suppliers in Asia to the Chinese plant for assembly. However, a product…...

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