Sample Assignment Supply Chain Management

Supply Chain Management at Lichen Tents

Lichen Tents Inc. is a manufacturer and supplier of high quality backpacking tents to three large retail outdoor supply firms. In order to prevent its one factory from running out of nylon and PVC, Lichen maintains multiple sources (2) of supply of these important raw materials. Raw material supply and customer demand over the next two weeks are recorded below:

Raw material availability in pounds

Nylon 1 Nylon 2 PVC 1 PVC 2

Week 1 300 225 600 550

Week 2 300 300 550 600

$4.20* $4.35* $7.15* $7.25*

* Raw material acquisition and shipping cost to the factory (per pound)

Demand in tents

Customer 1 Customer 2 Customer 3

Week 1 300 200 300

Week 2 300 300 500

$1.10** $1.15** $1.20**

** Finished product shipping cost from the factory to each customer (per tent)

Lichen Tents only makes one product at its one factory. The capacity of the factory is 1050 tents. One half pound of nylon and one pound of PVC are required for each tent. The processing cost to produce one tent is $70.

The only inventory that can be tolerated is finished goods inventory at the customer's location. However, Lichen pays $5 holding cost per cent per week shipped to a customer's location early.