Sorting goods is the main purpose of this type of warehouse.
Sorting goods is the main purpose of the hub-and-spoke warehouse.
Sorting in the supply chain of logistics is the process of categorizing goods and products in the warehouses of the distribution channels as per their destination. Sorting is done by maintaining a proper mathematical record of every good and its characteristics and assigned location.
The hub-and-spoke warehouse is a kind of combination of two ideas, i.e., consolidation and cross-docking. The goods are immediately sorted to consolidate areas as per their characteristics. This kind of model resembles the bicycle model in which the “hub” means the warehouse or the distribution channel, and the “spoke” refers to the direction of the location.
Question: A company currently using an inspection process in its material receiving department is trying to install an overall cost reduction program. One possible reduction is the elimination of one inspection position. This position tests material that has a defective content on an average of 0.04. By inspecting all items, the inspector can remove all defects. The inspector can inspect 50 units per hour. The hourly rate including fringe benefits for this position is $9. If the inspection position is eliminated, defects will go into product assembly and will have to be replaced later at a cost of $10 each when they are detected in final product testing.
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