Laburnum Case Analysis

Laburnum Case Analysis
Laburnum Case Study Analysis
Assessment 2
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Laburnum Case Analysis
Contents
Introduction...........................................................................................................................................3
Discussion..............................................................................................................................................3
Conclusion.............................................................................................................................................8
References.............................................................................................................................................9
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Laburnum Case Analysis
Introduction
Supply chain forms an integral contributor for success of firm’s distribution of products in
market and hence its efficacy is vital to reduce cost and other supply uncertainties. In this
report problems encountered by Sapphire Energy and AusCotton have been analysed and
their implications are presented along with recommendation for improvement.
Discussion
Energy Portfolio: Sapphire Energy
1.
In the existing agreement with suppliers, the ordering arrangement for Eastern Power equals
1/12th of their yearly demand for each month
= 155000/12 = 12916.66 units per month
This represents Total inventory cost equals to C (Q/2) = F (D/Q)
= 1.35(12916.66/2) [phone]/12916.66)
= 8718.7455+600.00030= 9318.7458
Where, C= Carrying cost per unit/ year =1.35
Q= Quantity per order =12916.66
D= Demand in units/year = 155000
F= Fixed cost = 50
As such existing ordering arrangement of 1/12th of annual demand for each month
(155000/12= 12916.66 units a month) will mean overall inventory cost equaling to
9318.7458
2.
The least possible quantity that can be bought from supplier equals to 4500 m/ order
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