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Academic MBA Question:

MBA Case Study – Axis Apparels is a company based out of Delhi, India. They produce garments using fabric imported from a factor in China. The factory in China dispatches the goods on the same day when they receive the order. The shipments are made through air and the transportation lead time is 10 days include customs clearance at both countries. Once the fabric is received, the company performs QC test in a lab and only after that, the fabric can be used for making garments. QC test takes 10 days. On an average company uses 3,00,000 meters of fabric every month. However, the business development team of the company has informed that any day they can receive a new order from a client and in that case the consumption of fabric per month can go up to 4,50,000 meters

  1. How much safety stock of fabric should the company maintain? (5 Marks)
  2. At what inventory level the order for new lot of fabric should be placed.

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