KEY Electronics - Sourcing and Warehouse Analysis

T. Kraft, Y.T. Chung, F. Erhun; Stanford University

This section provides a brief overview of the entire spreadsheet and an instruction on how
to use the interactive decision tool in the Solution tab.
Contents
1. Solution (and decision tool)
This tab provides the average annual procurement cost calculations for each SKU. The reader
can try the interactive decision tool to check the total costs including the average annual
procurement cost and the warehousing cost.
2. Appendix data
This tab contains all basic information regarding each SKU category such as physical
specifications, profit margins, duties, and demand distributions.
3. Appendix categories
This tab presents the number of SKUs in each category.
4. Appendix parameters
This tab contains all parameters needed for cost calculations of each sourcing option.
5. 3PL parameters
This tab contains the cost structure of the 3PL provider.
6. 3PL cost calculations
This tab provides the three cost calculations (storage cost, receiving cost, and shipping cost) for
the 3PL option.
7. Frequency calculations
This tab automatically calculates the number of pallets for each SKU in each week according to
the sourcing decision given in the Solution tab.
8. Warehouse parameters
This tab contains all information regarding the cost structure of the existing warehouse. The
reader can estimate the cost sturcture of the new warehouse option from this information.
9. Warehouse cost calculations
This tab automatically calculates the cost of the new warehouse option according to the sourcing
decision given in the Solution tab by considering the number of pallets in each week.

Instruction for the Interactive decision tool

The interactive decision tool is found on the Solution tab, from the column CJ to CQ. Please note
that the blue-colored cells named "decision variable cells" (CK3:CL12, and CQ3) are the only
input cells. All other cells (including cells in other tabs) will be adjusted automatically based on the
user's input. The user can input "1" to choose the option and "0" not to choose the option.
According to the user's input, all other cells will be updated and the total cost for the given option
will appear in cell CR13. The minimum cost sourcing strategy can be found in column CH.

SKU
2300105
1609313
2780211
1709786
6300612
1309034
6509036
6109015
4309113
2000234

KM Description
BATERIA KY357
T.V. 25" SANYO
CONECTOR F-59
TEL CEL SONY Z200
PURIFICADOR DE AIRE
KARAOKE JXOK5
CALC.CIENT.SC OL153
REGULADOR KOBLENZ BP1000
TELEFONO ALAMBRICO GONDOL
RADIO FM YB400PE

Item
Current Source
Batteries
KEY
TV
Local
Cable/Connector
KEY
Cellphone
KEY
Air Purifier
KEY
Karaoke Machine
Local
Calculator
Local
Surge Protector
Local
Telephone
Local
Radio
KEY

Weight
(lbs)
0.1
8.82
0.01
0.6
8.08
16.5
1.23
0.96
1.50
3

SKU
Batteries
TV
Cable/Connector
Cellphone
Air Purifier
Karaoke Machine
Calculator
Surge Protector
Telephone
Radio

US
0
0
0
0
1
0
0
1
1
1

Sourcing + Warehouse Cost

Asia
Local
1
0
0
1
0
1
0
1
0
0
0
1
0
1
0
0
0
0
0
0
Decision Variable Cells

Best
Asia
Local Cts
Local Cts
Local Cts
US
Local Cts
Local Cts
US
US
US
Total Sourcing

Volume
(Cubic ft)
0.016
2.08
0.043
0.13
1.36
3.5
0.2
0.08
0.14
0.16

Units/
Pallet
1,000
8
350
128
8
4
80
200
115
100

Local
Sales Price Base Unit
($)
Cost ($)
1.33
0.80
176.94
129.17
1.18
0.66
142.22
128.00
166.67
116.67
138.89
108.33
16.28
10.42
20.51
13.33
9.49
6.83
174.39
148.23

US
Base Unit
Cost ($)
0.41
116.78
0.38
108.09
93.33
75.00
8.46
8.41
4.46
120.33

Asia
Base Unit
Cost ($)
0.40
115.01
0.37
106.67
91.67
73.61
8.30
8.21
4.37
118.58

Duty
18%
30%
10%
35%
15%
50%
25%
13%
23%
20%

Service level
(Type 1)
0.98
0.98
0.9
0.98
0.95
0.95
0.95
0.95
0.98
0.95

Procureme
Warehousing Cost
#REF!
0
#REF!
WHSE
#REF!
#REF!
#REF!
#REF!
#REF!
1
#REF!
#REF!
3PL
#REF!
#REF!
#REF!
#REF!
Total Whse
#REF!

Fixed Cost for WHSE

Variable Cost for WHSE
TOTAL

#REF!
#REF!
#REF!

3PL Storage
3PL Receiving
3PL Shipping

#REF!
#REF!
#REF!

TOTAL

#REF!

TOTAL
#REF!

Projected 2012
Mean Demand
(Month)
1,800
115
675
152
125
30
108
540
910
38

Std Dev of
Demand (Month)
250
95
85
69
45
16
65
270
334
17

Duty & Labeling

Unit Costs
US*Duty
0.48
151.81
0.42
145.92
107.33
112.50
10.58
9.50
5.49
144.40

Unit Costs Asia *

Duty
0.47
149.51
0.41
144.00
105.42
110.42
10.38
9.28
5.38
142.30

Unit Costs (US) +

Labeling (US)
0.62
151.95
0.56
146.06
107.47
112.64
10.72
9.64
5.63
144.54

Transportation
Unit Costs (Asia) + Unit Costs (US) + Unit Costs (Asia) +
Labeling (Asia)
Transp (US)
Transp (Asia)
0.49
0.64
0.54
149.53
153.19
154.86
0.43
0.56
0.52
144.02
146.15
144.36
105.44
108.60
109.20
110.44
114.95
119.59
10.40
10.89
10.95
9.30
9.78
9.58
5.40
5.84
5.86
142.32
144.96
143.00

EOQ

EOQ (Local)
246
5
166
6
5
3
17
33
60
3

EOQ (US)
1147
19
750
22
23
11
68
161
270
11

EOQ

EOQ (Asia)
2014
30
1257
36
37
17
109
261
433
18

T (Local) - Mos
0.14
0.04
0.25
0.04
0.04
0.09
0.15
0.06
0.07
0.07

T (US) - Mos
0.64
0.16
1.11
0.14
0.19
0.37
0.63
0.30
0.30
0.29

T (Asia) - Mos
1.12
0.26
1.86
0.23
0.30
0.58
1.01
0.48
0.48
0.47

Lead Time
Demand (Local)
178
11
67
15
12
3
11
53
90
4

Asia
US
Local

Lead Time
Lead Time
StdDev (Local)
79
30
27
22
14
5
20
85
105
5

Lead Time
Demand (US)
828
53
311
70
58
14
50
249
419
17

LT (Days)
65
14
3

LT (Mos)
2.137
0.46
0.10

Lead Time
StdDev (US)
186
65
64
47
31
11
44
185
230
12

Lead Time
Demand (Asia)
3847
246
1442
325
267
64
231
1154
1945
81

LT StdDev (Days) LT StdDev (Mos)

7
0.23
1.3
0.04
-

Lead Time
StdDev (Asia)
552
141
199
107
72
24
98
414
531
26

Reorder Point (R)

R (Local)
339
73
101
59
36
11
44
193
305
13

R (US)
1211
186
393
167
109
32
123
552
891
37

Safety Stock

R (Asia)
4981
536
1697
544
385
104
392
1835
3036
125

Safety Stock
(Local)
161
61
34
45
23
8
34
139
215
9

Safety Stock (US)

382
133
83
97
51
18
73
304
472
19

ety Stock

Hold Cost
Safety Stock
(Asia)
1135
290
255
219
118
40
162
681
1091
43

Hold Cost (Local)

$57
$2,058
$19
$1,515
$756
$261
$109
$520
$419
$374

Hold Cost (US)

$152
$5,442
$64
$3,949
$1,699
$675
$291
$939
$886
$895

Order Cost

Hold Cost (Asia)

$287
$11,821
$114
$8,557
$3,732
$1,460
$592
$1,942
$1,917
$1,870

Order Cost
(Local)
$17,280
$178,255
$5,346
$233,472
$175,005
$38,999
$13,504
$86,378
$74,584
$67,593

Order Cost

Order Cost (US) Order Cost (Asia)

$13,776
$11,595
$211,401
$213,700
$4,531
$4,182
$266,569
$263,318
$162,901
$163,797
$41,382
$43,052
$14,110
$14,195
$63,359
$62,056
$63,727
$64,014
$66,100
$65,210

Setup Cost
Setup Cost
(Local)
$25
$79
$14
$90
$78
$37
$22
$55
$51
$49

Setup Cost (US) Setup Cost (Asia)

$91
$135
$358
$580
$52
$81
$402
$644
$315
$508
$159
$260
$93
$150
$196
$313
$197
$318
$200
$320

Loss Fxn

L(z)
0.0073
0.0073
0.0473
0.0073
0.0209
0.0209
0.0209
0.0209
0.0073
0.0209

Penalty Cost
Penalty Cost
(Local)
$6
$354
$2
$255
$172
$57
$22
$118
$66
$83

Penalty Cost
(US)
$11
$909
$4
$634
$352
$131
$50
$189
$123
$176

Total Cost (Q,R)

Penalty Cost
(Asia)
$27
$2,010
$12
$1,415
$819
$305
$112
$414
$286
$394

Total Cost Cts

(Local)
$17,367
$180,745
$5,381
$235,332
$176,012
$39,353
$13,657
$87,071
$75,119
$68,098

Total Cost (Q,R)

Total Cost Cts
(US)
$15,031
$219,110
$5,652
$272,554
$166,266
$43,347
$15,544
$65,683
$65,932
$68,371

T
Total Cost Cts
(Asia)
$13,045
$229,111
$5,390
$274,934
$169,856
$46,077
$16,048
$65,724
$67,534
$68,794

T (Local) Optimal
0.14
0.04
0.25
0.04
0.04
0.09
0.15
0.06
0.07
0.07

T Adj (US)
0.46
0.46
0.92
0.46
0.46
0.46
0.46
0.46
0.46
0.46

T Adj (Asia)
0.92
0.92
1.85
0.92
0.92
0.92
0.92
0.92
0.92
0.92

Order Intervals
US
Asia

Weeks
2.0
4.0

Mos
0.46
0.92

US
0.46
0.92
1.38
1.85
2.31
2.77
3.23
3.69
4.15
4.62

Asia
0.92
1.85
2.77
3.69
4.62
5.54
6.46
7.38
8.31
9.23

EOQ

EOQ (US)
831
53
623
70
58
14
50
249
420
18

Lead Time

EOQ(Asia)
1662
106
1246
140
115
28
100
498
840
35

Lead Time
StdDev (Local)
121
36
50
25
17
7
33
108
135
7

Lead Time
StdDev (US)
252
91
104
67
44
15
63
260
323
16

Lead Time
StdDev (Asia)
602
168
230
126
84
29
116
488
621
31

Safety Stock

Hold Cost

Safety Stock Prd Safety Stock Prd Safety Stock Prd

(Local)
(US)
(Asia)
Hold Cost (Local)
249.0
517.7
1237.1
$74
73.3
187.6
345.6
$2,446
63.9
133.3
294.8
$24
52.2
136.7
258.1
$1,761
27.8
71.6
137.9
$891
11.5
25.4
47.4
$347
53.8
102.9
191.4
$162
177.5
428.1
803.3
$646
278.1
663.4
1274.7
$526
11.5
27.0
51.0
$473
S*
US
2,177
294
1,067
277
187
53
202
926
1,502
62

Asia
6,745
698
2,983
723
520
139
522
2,456
4,059
167

Hold Cost (US)

$149
$8,201
$62
$6,276
$2,727
$928
$348
$1,351
$1,274
$1,296

old Cost

Order Cost

Hold Cost (Asia)

$278
$15,434
$118
$11,847
$5,338
$1,832
$661
$2,520
$2,484
$2,450

Order Cost
(Local)
$17,280
$178,255
$5,346
$233,472
$175,005
$38,999
$13,504
$86,378
$74,584
$67,593

Order Cost (US) Order Cost (Asia)

$13,776
$11,595
$211,401
$213,700
$4,531
$4,182
$266,569
$263,318
$162,901
$163,797
$41,382
$43,052
$14,110
$14,195
$63,359
$62,056
$63,727
$64,014
$66,100
$65,210

Setup Cost
Setup Cost
(Local)
$25
$79
$14
$90
$78
$37
$22
$55
$51
$49

Setup Cost

Setup Cost (US) Setup Cost (Asia)

$126
$164
$126
$164
$63
$82
$126
$164
$126
$164
$126
$164
$126
$164
$126
$164
$126
$164
$126
$164

Penalty Cost
Penalty Cost
(Local)
$9
$423
$4
$299
$206
$79
$36
$150
$85
$108

Penalty Cost
(US)
$15
$1,284
$7
$893
$494
$185
$71
$266
$173
$248

Penalty Cost
(Asia)
$30
$2,392
$14
$1,665
$956
$360
$133
$489
$334
$463

Total Category Cost (Periodic)

(Continuous)

Total Cost Prd

Total Cost Prd
Total Cost Prd
(Local)
(US)
(Asia)
$869,395
$753,318
$653,294
$1,812,030
$2,220,120
$2,326,905
$285,553
$300,162
$286,034
$4,712,452
$5,497,302
$5,559,876
$2,642,703
$2,508,729
$2,568,831
$591,928
$654,316
$696,120
$205,853
$234,830
$242,283
$8,723,015
$6,610,271
$6,622,806
$902,947
$795,607
$815,946
$682,223
$687,702
$692,865
Single SKU Cost (Periodic)
$17,388
$15,066
$13,066
$181,203
$222,012
$232,691
$5,388
$5,663
$5,397
$235,623
$274,865
$277,994
$176,180
$167,249
$171,255
$39,462
$43,621
$46,408
$13,724
$15,655
$16,152
$87,230
$66,103
$66,228
$75,246
$66,301
$67,996
$68,222
$68,770
$69,287

Total Cost Cts

(Local)
$868,360
$1,807,450
$285,198
$4,706,631
$2,640,177
$590,301
$204,862
$8,707,125
$901,433
$680,983
(Continuous)
$17,367
$180,745
$5,381
$235,332
$176,012
$39,353
$13,657
$87,071
$75,119
$68,098

Recommendations
Recommended
(Sourcing only)
Asia
Local Cts
Local Cts
Local Cts
US
Local Cts
Local Cts
US
US
Local Cts
Total
$13,066
$180,745
$5,381
$235,332
$167,249
$39,353
$13,657
$66,103
$66,301
$68,098

Recommendations
Sourcing Cost (w/o
warehouse)
$653,294
$1,807,450
$285,198
$4,706,631
$2,508,729
$590,301
$204,862
$6,610,271
$795,607
$680,983
$18,843,326

Sourcing + Warehouse Cost

SKU
Batteries
TV
Cable/Connector
Cellphone
Air Purifier
Karaoke Machine
Calculator
Surge Protector
Telephone
Radio

US
0
0
0
0
1
0
0
1
1
0

Asia
1
0
0
0
0
0
0
0
0
0

Local
0
1
1
1
0
1
1
0
0
1

Decision Variable Cells

Min Unit Cost
0.58
129.17
0.64
128.00
109.27
108.33
10.42
9.73
5.93
145.20

Unit Cost Solution

Asia
Local
Asia
Local
US
Local
Local
Asia
US
Asia

cing + Warehouse Cost

Best Option
Asia
Local Cts
Local Cts
Local Cts
US
Local Cts
Local Cts
US
US
Local Cts
Total Sourcing

Procurement
Cost
$653,294
$1,807,450
$285,198
$4,706,631
$2,508,729
$590,301
$204,862
$6,610,271
$795,607
$680,983
$18,843,326

Warehousing Cost
1
WHSE

$378,107
0

3PL

Total Whse

$0
$378,107
WHSE Avg Utiliz

Fixed Cost for WHSE

Variable Cost for WHSE
TOTAL

$251,400
$126,707
$378,107

3PL Storage
3PL Receiving
3PL Shipping
TOTAL

$186,927
$89,889
$102,375
$379,190

TOTAL
$19,221,432
49%

Pallets on-hand

T
0.92
0.04
0.25
0.04
0.46
0.09
0.15
0.46
0.46
0.07

Min
83
83
7
8
188
41
9
276
91
1
787

Max
145
83
30
8
242
41
9
339
113
1
1,012

Avg
114
83
18
8
215
41
9
308
102
1
900

Pallets
received per
year
1,092
1,974
1,274
323
2,834
1,452
312
3,250
1,144
174
13,829

Current
Sourcing
Projected Cost
$753,318
$1,807,450
$300,162
$5,497,302
$2,508,729
$590,301
$204,862
$8,707,125
$901,433
$687,702
$21,958,384

Selected
Sourcing
Projected Cost
$653,294
$1,807,450
$285,198
$4,706,631
$2,508,729
$590,301
$204,862
$6,610,271
$795,607
$680,983
$18,843,326

Savings from
sourcing
$3,115,059

SKU
2300105
1609313
2780211
1709786
6300612
1309034
6509036
6109015
4309113
2000234

KM Description
BATERIA KY357
T.V. 25" SANYO
CONECTOR F-59
TEL CEL SONY Z200
PURIFICADOR DE AIRE
KARAOKE JXOK5
CALC.CIENT.SC OL153
REGULADOR KOBLENZ BP1000
TELEFONO ALAMBRICO GONDOL
RADIO FM YB400PE

Item
Batteries
TV
Cable/Connector
Cellphone
Air Purifier
Karaoke Machine
Calculator
Surge Protector
Telephone
Radio

Current
Source
KEY
Local
KEY
KEY
KEY
Local
Local
Local
Local
KEY

Weight
(lbs)
0.10
8.82
0.01
0.60
8.08
16.50
1.23
0.96
1.50
3.00

Volume
(Cubic ft)
0.016
2.08
0.043
0.13
1.36
3.50
0.20
0.08
0.14
0.16

Units/
Pallet
1,000
8
350
128
8
4
80
200
115
100

Sales
Price ($)
1.33
176.94
1.18
142.22
166.67
138.89
16.28
20.51
9.49
174.39

Local
Base Unit
Cost ($)
0.80
129.17
0.66
128.00
116.67
108.33
10.42
13.33
6.83
148.23

US
Base Unit
Cost ($)
0.41
116.78
0.38
108.09
93.33
75.00
8.46
8.41
4.46
120.33

Asia
Base Unit
Cost ($)
0.40
115.01
0.37
106.67
91.67
73.61
8.30
8.21
4.37
118.58

Duty
18%
30%
10%
35%
15%
50%
25%
13%
23%
20%

Service
Level
(Type 1)
0.98
0.98
0.90
0.98
0.95
0.95
0.95
0.95
0.98
0.95

Projected 2012
Mean
Std Dev of
Demand
Demand
(Month)
(Month)
1,800
250
115
95
675
85
152
69
125
45
30
16
108
65
540
270
910
334
38
17

SKU Category1
13
16
17
20
23
27
43
61
63
65

Description
Music
TV, DVD
Cell phones
Antennas, Short-wave radios
Batteries
Fuses, adapters
Telephones
Surge protectors
Gadgets
Calculators
Total
1

Number of SKUs
15
10
20
10
50
53
12
100
15
15
300

SKU Category = First two digits of SKU number

SKU Category (re-order)

2300105
1609313
2780211
1709786
6300612
1309034
6509036
6109015
4309113
2000234
Total

Number of SKUs
50
10
53
20
15
15
15
100
12
10
300

General
Annual Holding Cost Interest Rate

25.00%

Ocean Freight
$/Cubic ft

$2.05

US Shipping
$/lb (OKC to Border)

$0.05

Lead Times/Replenishment (Days)

Asia
Asia (Std. Deviation)
OKC
OKC (Std. Deviation)
Local
Mexico Shipping
$/lb (Border to Mexico City)
$/lb (Manzanillo to Mexico City)

ishment (Days)

Order Costs (per SKU)

65
7
14
1.3
3

Asia
US
Local
Labeling
Cost per unit (Asia)
Cost per unit (OKC)

ipping
$0.09
$0.12

$12.60
$4.86
$0.28

$0.02
$0.14

3PL Pricing
Description
Receiving cost/pallet1
Shipping cost/replenishment2
Avg. orders per week/per store

Value
$6.50
$11.25
2.5

Storage cost/pallet per week3

Pallets on-hand (x)
x < 1000
1000 x < 1200
1200 x < 1400
1400 x

Incremental quantity
discount
$4.00
$2.75
$1.50
$0.75

includes cost to receive and putaway pallets

includes cost to pick, prep, and ship a replenishment (i.e., a store order)
3

weekly inventory snap-shot taken on Friday

Used in formulas
1000
$4,000
1200
$4,550
1400
$4,850

3PL Storage Cost Calculations

Week
1
2
3
Cost
$4,032
$3,316
$3,881
Cost_H
$4,047
$3,316
$3,881
Cost_M2
$4,032
$3,530
$3,918
Cost_M1
$4,268
$3,994
$4,205
Cost_L
$4,559
$4,422
$4,528
Storage Cost

4
$3,150
$3,150
$3,416
$3,931
$4,391

5
$4,032
$4,047
$4,032
$4,268
$4,559

6
$3,316
$3,316
$3,530
$3,994
$4,422

7
$3,881
$3,881
$3,918
$4,205
$4,528

$186,927

3PL Receiving Cost Calculations

SKU
2300105
1609313
2780211
1709786
6300612
1309034
6509036
6109015
4309113
2000234

Source
Asia
Local Cts
Local Cts
Local Cts
US
Local Cts
Local Cts
US
US
Local Cts

Weeks
between
replens
4.00
0.18
1.06
0.16
2.00
0.39
0.67
2.00
2.00
0.30

Receipts
per year
13
282
49
323
26
132
78
26
26
174

3PL Shipping Cost Calculations

70
Stores
x
2.5
Replen/wk/store
x
52
weeks/year
9100
Replens/yr
x $11.25
Cost/Replen
$102,375 Shipping Cost

3PL Cost
Storage
$186,927
Receiving
$89,889
Shipping
$102,375
Total Cost
$379,190

Q
1662
5
166
6
58
3
17
249
420
3

Pallets/
Receipt
Pallets
Units/
(SKU
received
Pallet
Category) per year
1000
84
1,092
8
7
1,974
350
26
1,274
128
1
323
8
109
2,834
4
11
1,452
80
4
312
200
125
3,250
115
44
1,144
100
1
174
Total pallets received 13,829
Cost/Pallet
$6.50
Receiving Cost $89,889

8
$3,150
$3,150
$3,416
$3,931
$4,391

9
$4,032
$4,047
$4,032
$4,268
$4,559

10
$3,316
$3,316
$3,530
$3,994
$4,422

11
$3,881
$3,881
$3,918
$4,205
$4,528

12
$3,150
$3,150
$3,416
$3,931
$4,391

13
$4,032
$4,047
$4,032
$4,268
$4,559

14
$3,316
$3,316
$3,530
$3,994
$4,422

15
$3,881
$3,881
$3,918
$4,205
$4,528

16
$3,150
$3,150
$3,416
$3,931
$4,391

17
$4,032
$4,047
$4,032
$4,268
$4,559

18
$3,316
$3,316
$3,530
$3,994
$4,422

19
$3,881
$3,881
$3,918
$4,205
$4,528

20
$3,150
$3,150
$3,416
$3,931
$4,391

21
$4,032
$4,047
$4,032
$4,268
$4,559

22
$3,316
$3,316
$3,530
$3,994
$4,422

23
$3,881
$3,881
$3,918
$4,205
$4,528

24
$3,150
$3,150
$3,416
$3,931
$4,391

25
$4,032
$4,047
$4,032
$4,268
$4,559

26
$3,316
$3,316
$3,530
$3,994
$4,422

27
$3,881
$3,881
$3,918
$4,205
$4,528

28
$3,150
$3,150
$3,416
$3,931
$4,391

29
$4,032
$4,047
$4,032
$4,268
$4,559

30
$3,316
$3,316
$3,530
$3,994
$4,422

31
$3,881
$3,881
$3,918
$4,205
$4,528

32
$3,150
$3,150
$3,416
$3,931
$4,391

33
$4,032
$4,047
$4,032
$4,268
$4,559

34
$3,316
$3,316
$3,530
$3,994
$4,422

35
$3,881
$3,881
$3,918
$4,205
$4,528

36
$3,150
$3,150
$3,416
$3,931
$4,391

37
$4,032
$4,047
$4,032
$4,268
$4,559

38
$3,316
$3,316
$3,530
$3,994
$4,422

39
$3,881
$3,881
$3,918
$4,205
$4,528

40
$3,150
$3,150
$3,416
$3,931
$4,391

41
$4,032
$4,047
$4,032
$4,268
$4,559

42
$3,316
$3,316
$3,530
$3,994
$4,422

43
$3,881
$3,881
$3,918
$4,205
$4,528

44
$3,150
$3,150
$3,416
$3,931
$4,391

45
$4,032
$4,047
$4,032
$4,268
$4,559

46
$3,316
$3,316
$3,530
$3,994
$4,422

47
$3,881
$3,881
$3,918
$4,205
$4,528

48
$3,150
$3,150
$3,416
$3,931
$4,391

49
$4,032
$4,047
$4,032
$4,268
$4,559

50
$3,316
$3,316
$3,530
$3,994
$4,422

51
$3,881
$3,881
$3,918
$4,205
$4,528

52
$3,150
$3,150
$3,416
$3,931
$4,391

SKU
2300105
1609313
2780211
1709786
6300612
1309034
6509036
6109015
4309113
2000234

Source
Asia
Local Cts
Local Cts
Local Cts
US
Local Cts
Local Cts
US
US
Local Cts

Q
1662
5
166
6
58
3
17
249
420
3

SS
1237
61
34
45
72
8
34
428
663
9

Units/Pallet T (weeks)
1000
4.00
8
0.18
350
1.06
128
0.16
8
2.00
4
0.39
80
0.67
200
2.00
115
2.00
100
0.30

1
2.9
8.3
0.6
0.4
16.2
2.7
0.6
3.4
9.4
0.1

2
2.5
8.3
0.1
0.4
12.6
2.7
0.6
2.8
7.6
0.1

3
2.1
8.3
0.6
0.4
16.2
2.7
0.6
3.4
9.4
0.1

1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00

0.75
1.00
0.06
1.00
0.50
1.00
1.00
0.50
0.50
1.00

0.50
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00

4
1.7
8.3
0.1
0.4
12.6
2.7
0.6
2.8
7.6
0.1

5
2.9
8.3
0.6
0.4
16.2
2.7
0.6
3.4
9.4
0.1

6
2.5
8.3
0.1
0.4
12.6
2.7
0.6
2.8
7.6
0.1

7
2.1
8.3
0.6
0.4
16.2
2.7
0.6
3.4
9.4
0.1

8
1.7
8.3
0.1
0.4
12.6
2.7
0.6
2.8
7.6
0.1

9
2.9
8.3
0.6
0.4
16.2
2.7
0.6
3.4
9.4
0.1

10
2.5
8.3
0.1
0.4
12.6
2.7
0.6
2.8
7.6
0.1

11
2.1
8.3
0.6
0.4
16.2
2.7
0.6
3.4
9.4
0.1

12
1.7
8.3
0.1
0.4
12.6
2.7
0.6
2.8
7.6
0.1

0.25
1.00
0.06
1.00
0.50
1.00
1.00
0.50
0.50
1.00

1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00

0.75
1.00
0.06
1.00
0.50
1.00
1.00
0.50
0.50
1.00

0.50
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00

0.25
1.00
0.06
1.00
0.50
1.00
1.00
0.50
0.50
1.00

1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00

0.75
1.00
0.06
1.00
0.50
1.00
1.00
0.50
0.50
1.00

0.50
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00

0.25
1.00
0.06
1.00
0.50
1.00
1.00
0.50
0.50
1.00

13
2.9
8.3
0.6
0.4
16.2
2.7
0.6
3.4
9.4
0.1

14
2.5
8.3
0.1
0.4
12.6
2.7
0.6
2.8
7.6
0.1

15
2.1
8.3
0.6
0.4
16.2
2.7
0.6
3.4
9.4
0.1

16
1.7
8.3
0.1
0.4
12.6
2.7
0.6
2.8
7.6
0.1

17
2.9
8.3
0.6
0.4
16.2
2.7
0.6
3.4
9.4
0.1

18
2.5
8.3
0.1
0.4
12.6
2.7
0.6
2.8
7.6
0.1

19
2.1
8.3
0.6
0.4
16.2
2.7
0.6
3.4
9.4
0.1

20
1.7
8.3
0.1
0.4
12.6
2.7
0.6
2.8
7.6
0.1

21
2.9
8.3
0.6
0.4
16.2
2.7
0.6
3.4
9.4
0.1

1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00

0.75
1.00
0.06
1.00
0.50
1.00
1.00
0.50
0.50
1.00

0.50
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00

0.25
1.00
0.06
1.00
0.50
1.00
1.00
0.50
0.50
1.00

1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00

0.75
1.00
0.06
1.00
0.50
1.00
1.00
0.50
0.50
1.00

0.50
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00

0.25
1.00
0.06
1.00
0.50
1.00
1.00
0.50
0.50
1.00

1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00

22
2.5
8.3
0.1
0.4
12.6
2.7
0.6
2.8
7.6
0.1

23
2.1
8.3
0.6
0.4
16.2
2.7
0.6
3.4
9.4
0.1

24
1.7
8.3
0.1
0.4
12.6
2.7
0.6
2.8
7.6
0.1

25
2.9
8.3
0.6
0.4
16.2
2.7
0.6
3.4
9.4
0.1

26
2.5
8.3
0.1
0.4
12.6
2.7
0.6
2.8
7.6
0.1

27
2.1
8.3
0.6
0.4
16.2
2.7
0.6
3.4
9.4
0.1

28
1.7
8.3
0.1
0.4
12.6
2.7
0.6
2.8
7.6
0.1

29
2.9
8.3
0.6
0.4
16.2
2.7
0.6
3.4
9.4
0.1

30
2.5
8.3
0.1
0.4
12.6
2.7
0.6
2.8
7.6
0.1

0.75
1.00
0.06
1.00
0.50
1.00
1.00
0.50
0.50
1.00

0.50
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00

0.25
1.00
0.06
1.00
0.50
1.00
1.00
0.50
0.50
1.00

1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00

0.75
1.00
0.06
1.00
0.50
1.00
1.00
0.50
0.50
1.00

0.50
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00

0.25
1.00
0.06
1.00
0.50
1.00
1.00
0.50
0.50
1.00

1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00

0.75
1.00
0.06
1.00
0.50
1.00
1.00
0.50
0.50
1.00

31
2.1
8.3
0.6
0.4
16.2
2.7
0.6
3.4
9.4
0.1

32
1.7
8.3
0.1
0.4
12.6
2.7
0.6
2.8
7.6
0.1

33
2.9
8.3
0.6
0.4
16.2
2.7
0.6
3.4
9.4
0.1

34
2.5
8.3
0.1
0.4
12.6
2.7
0.6
2.8
7.6
0.1

35
2.1
8.3
0.6
0.4
16.2
2.7
0.6
3.4
9.4
0.1

36
1.7
8.3
0.1
0.4
12.6
2.7
0.6
2.8
7.6
0.1

37
2.9
8.3
0.6
0.4
16.2
2.7
0.6
3.4
9.4
0.1

38
2.5
8.3
0.1
0.4
12.6
2.7
0.6
2.8
7.6
0.1

39
2.1
8.3
0.6
0.4
16.2
2.7
0.6
3.4
9.4
0.1

0.50
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00

0.25
1.00
0.06
1.00
0.50
1.00
1.00
0.50
0.50
1.00

1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00

0.75
1.00
0.06
1.00
0.50
1.00
1.00
0.50
0.50
1.00

0.50
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00

0.25
1.00
0.06
1.00
0.50
1.00
1.00
0.50
0.50
1.00

1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00

0.75
1.00
0.06
1.00
0.50
1.00
1.00
0.50
0.50
1.00

0.50
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00

40
1.7
8.3
0.1
0.4
12.6
2.7
0.6
2.8
7.6
0.1

41
2.9
8.3
0.6
0.4
16.2
2.7
0.6
3.4
9.4
0.1

42
2.5
8.3
0.1
0.4
12.6
2.7
0.6
2.8
7.6
0.1

43
2.1
8.3
0.6
0.4
16.2
2.7
0.6
3.4
9.4
0.1

44
1.7
8.3
0.1
0.4
12.6
2.7
0.6
2.8
7.6
0.1

45
2.9
8.3
0.6
0.4
16.2
2.7
0.6
3.4
9.4
0.1

46
2.5
8.3
0.1
0.4
12.6
2.7
0.6
2.8
7.6
0.1

47
2.1
8.3
0.6
0.4
16.2
2.7
0.6
3.4
9.4
0.1

48
1.7
8.3
0.1
0.4
12.6
2.7
0.6
2.8
7.6
0.1

0.25
1.00
0.06
1.00
0.50
1.00
1.00
0.50
0.50
1.00

1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00

0.75
1.00
0.06
1.00
0.50
1.00
1.00
0.50
0.50
1.00

0.50
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00

0.25
1.00
0.06
1.00
0.50
1.00
1.00
0.50
0.50
1.00

1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00

0.75
1.00
0.06
1.00
0.50
1.00
1.00
0.50
0.50
1.00

0.50
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00

0.25
1.00
0.06
1.00
0.50
1.00
1.00
0.50
0.50
1.00

49
2.9
8.3
0.6
0.4
16.2
2.7
0.6
3.4
9.4
0.1

50
2.5
8.3
0.1
0.4
12.6
2.7
0.6
2.8
7.6
0.1

51
2.1
8.3
0.6
0.4
16.2
2.7
0.6
3.4
9.4
0.1

52
1.7
8.3
0.1
0.4
12.6
2.7
0.6
2.8
7.6
0.1

1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00

0.75
1.00
0.06
1.00
0.50
1.00
1.00
0.50
0.50
1.00

0.50
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00

0.25
1.00
0.06
1.00
0.50
1.00
1.00
0.50
0.50
1.00

Warehouse Parameters
Description

Value
Whse Fixed Cost

Capacity in pallets

1,850

Square feet

40,000

Rent

$150,000

Rent ($/Sq ft per year)

$3.75

Salaries

$101,400

Salary per:
Manager (1 in total)
Supervisor (4 in total)
Benefits (% applied to salary)

$251,400
$30,000
$12,000
30%

Week

High
Mid 100%

0.85
0.65

0.85
0.65

0.85
0.65

0.85
0.65

0.85
0.65

0.85
0.65

0.85
0.65

0.85
0.65

0.85
0.65

0.85
0.85
$3,500
0.65
0.65

Low

0.45

0.45

0.45

0.45

0.45

0.45

0.45

0.45

0.45

0.45

85% Capacity

80%

0.45
$3,000
$2,500

70%

$2,000

65% Capacity

60%

$1,500

50%

Variable Cost

Capacity Utilization

90%

$1,000

45% Capacity

40%

$500

30%

$0

10

11

12

Week
Capacity Utilization

Week
Variable
Cost
Capacity
Utilization

$3,200 $2,400 $2,350 $2,400 $1,600 $2,400

90%

75%

68%

80%

55%

68%

Variable Cost

April - June (2007)

$525

$1,700

$500

40%

58%

42%

10

11

$3,400 $2,350
95%

78%

0.85
0.65
0.45

Capacity Range

Variable Cost
$1,660
58%

Improve

0.85
0.65

$3,300
$2,350

$8,800
$6,267

$7,480
$5,327

.45<=x<.65

0.45

$1,650

$4,400

$3,740

$500

$1,333

$1,133

Scale
Improve

12

Scaled

x>=.85
.65<=x<.85
x<.45

June (2007)

Old VC

2.7
15%

SKU
2300105
1609313
2780211
1709786
6300612
1309034
6509036
6109015
4309113
2000234

Description

Best Option
Asia
Local Cts
Local Cts
Local Cts
US
Local Cts
Local Cts
US
US
Local Cts

BATERIA KY357
T.V. 25" SANYO
CONECTOR F-59
TEL CEL SONY Z200
PURIFICADOR DE AIRE
KARAOKE JXOK5
CALC.CIENT.SC OL153
REGULADOR KOBLENZ BP1000
TELEFONO ALAMBRICO GONDOL
RADIO FM YB400PE

Review Freq
0.92
0.04
0.25
0.04
0.46
0.09
0.15
0.46
0.46
0.07

$251,400
$126,707
$378,107

Fixed Cost
Variable Cost
Total Warehouse Cost

Projected Pallets on-hand

1,200

Pallets

1,000
800
600
400
200
0
1

15

22

29

Week

36

43

SKUs/Category
50
10
53
20
15
15
15
100
12
10
Total Pallets
Weekly Whse VC
Utilization

Week
1
145
83
30
8
242
41
9
339
113
1
1,012
$3,740
55%

Pallet Capacity

1,850

50

2
124
83
7
8
188
41
9
276
91
1
829
$1,133
45%

3
103
83
30
8
242
41
9
339
113
1
970
$3,740
52%

4
83
83
7
8
188
41
9
276
91
1
787
$1,133
43%

5
145
83
30
8
242
41
9
339
113
1
1,012
$3,740
55%

6
124
83
7
8
188
41
9
276
91
1
829
$1,133
45%

7
103
83
30
8
242
41
9
339
113
1
970
$3,740
52%

8
83
83
7
8
188
41
9
276
91
1
787
$1,133
43%

9
145
83
30
8
242
41
9
339
113
1
1,012
$3,740
55%

10
124
83
7
8
188
41
9
276
91
1
829
$1,133
45%

11
103
83
30
8
242
41
9
339
113
1
970
$3,740
52%

12
83
83
7
8
188
41
9
276
91
1
787
$1,133
43%

13
145
83
30
8
242
41
9
339
113
1
1,012
$3,740
55%

14
124
83
7
8
188
41
9
276
91
1
829
$1,133
45%

15
103
83
30
8
242
41
9
339
113
1
970
$3,740
52%

16
83
83
7
8
188
41
9
276
91
1
787
$1,133
43%

17
145
83
30
8
242
41
9
339
113
1
1,012
$3,740
55%

18
124
83
7
8
188
41
9
276
91
1
829
$1,133
45%

19
103
83
30
8
242
41
9
339
113
1
970
$3,740
52%

20
83
83
7
8
188
41
9
276
91
1
787
$1,133
43%

21
145
83
30
8
242
41
9
339
113
1
1,012
$3,740
55%

22
124
83
7
8
188
41
9
276
91
1
829
$1,133
45%

23
103
83
30
8
242
41
9
339
113
1
970
$3,740
52%

24
83
83
7
8
188
41
9
276
91
1
787
$1,133
43%

25
145
83
30
8
242
41
9
339
113
1
1,012
$3,740
55%

26
124
83
7
8
188
41
9
276
91
1
829
$1,133
45%

27
103
83
30
8
242
41
9
339
113
1
970
$3,740
52%

28
83
83
7
8
188
41
9
276
91
1
787
$1,133
43%

29
145
83
30
8
242
41
9
339
113
1
1,012
$3,740
55%

30
124
83
7
8
188
41
9
276
91
1
829
$1,133
45%

31
103
83
30
8
242
41
9
339
113
1
970
$3,740
52%

32
83
83
7
8
188
41
9
276
91
1
787
$1,133
43%

33
145
83
30
8
242
41
9
339
113
1
1,012
$3,740
55%

34
124
83
7
8
188
41
9
276
91
1
829
$1,133
45%

35
103
83
30
8
242
41
9
339
113
1
970
$3,740
52%

36
83
83
7
8
188
41
9
276
91
1
787
$1,133
43%

37
145
83
30
8
242
41
9
339
113
1
1,012
$3,740
55%

38
124
83
7
8
188
41
9
276
91
1
829
$1,133
45%

39
103
83
30
8
242
41
9
339
113
1
970
$3,740
52%

40
83
83
7
8
188
41
9
276
91
1
787
$1,133
43%

41
145
83
30
8
242
41
9
339
113
1
1,012
$3,740
55%

42
124
83
7
8
188
41
9
276
91
1
829
$1,133
45%

43
103
83
30
8
242
41
9
339
113
1
970
$3,740
52%

44
83
83
7
8
188
41
9
276
91
1
787
$1,133
43%

45
145
83
30
8
242
41
9
339
113
1
1,012
$3,740
55%

46
124
83
7
8
188
41
9
276
91
1
829
$1,133
45%

47
103
83
30
8
242
41
9
339
113
1
970
$3,740
52%

48
83
83
7
8
188
41
9
276
91
1
787
$1,133
43%

49
145
83
30
8
242
41
9
339
113
1
1,012
$3,740
55%

50
124
83
7
8
188
41
9
276
91
1
829
$1,133
45%

51
103
83
30
8
242
41
9
339
113
1
970
$3,740
52%

52
83
83
7
8
188
41
9
276
91
1
787
$1,133
43%