SUPPLY CHAIN MANAGEMENT

Harley Davidson

Harley Davidson

Introduction

Harley-Davidson, often abbreviated HD or Harley, is a manufacturer of motorcycles in the United States based in Milwaukee, Wisconsin. In addition to motorcycles, the company produces a lot of consumer products with the logo of Harley-Davidson which includes Clothes , shoes , furniture , crockery , produced under this brand, to create a unique style of life from Harley, which makes the bike a real cult.

Supply chain management refers to the tools and methods that aim to improve and automate the supply by reducing inventory and lead times. It includes planning and management of all tasks in supplier selection, procurement, conversion and all tasks of the logistics. It refers to the tools and methods that aim to improve and automate the supply by reducing inventory and lead times (Wisner, 2011).

Case Summary

Harley Davidson

Harley Davidson has to transport engines between two plants between Milwaukee and

Pennsylvania and its costs $1,000 for each trip. The data from the given case is detailed below;

Data

D (Demand) (assuming the operating days of 365) =

109,500

Fc (Fixed cost per order) =

$ 1,000

C (Cost per engine) =

$ 500

H (Holding cost) =

20 %

Note: assuming there are 365 operating days

Economic order quantity =

1,480

Number of orders per year =

74

Annual Order Cost =

$ 73,993

Cycle inventory (units) =

740

Cycle inventory (value) =

369,966

Annual Holding Cost =

$ 73,993

Total Inventory Cost =

$ 147,986

(Detailed Calculations are can be referred to the attached excel sheet)

Interprepation

Harley should load economic order quantity in each trip i.e 1,480.

To compute the cycle inventory of engines at Harley, following computations are needed.

Order Size Increment = 20

Order Size

Annual Order Cost

Holding Cost

Total Cost

300

$365,000

$15,000

$380,000

320

$342,188

$16,000

$358,188

340

$322,059

$17,000

$339,059

360

$304,167

$18,000

$322,167

380

$288,158

$19,000

$307,158

400

$273,750

$20,000

$293,750

420

$260,714

$21,000

$281,714

440

$248,864

$22,000

$270,864

460

$238,043

$23,000

$261,043

480

$228,125

$24,000

$252,125

500

$219,000

$25,000

$244,000

520

$210,577

$26,000 ...