LCC Medical Manufacturing, located in Punta Gorda, Florida, produces medical devices for orthopedic surgery including replacement parts for human knees, hips, and elbows, and surgical tools. One component LCC  outsources is the metal tibial component. This part has a metal stem that is inserted into the tibial lower leg bone. LCC is evaluating three Tier 1 suppliers to manufacture the component part in a certain size. Annual demand for this stockkeeping-unit (SKU) is 20,000 units per year, and we assume 250 working days in a year.

Questions

1. What is the total supply chain and logistics cost for each supplier when Q = 5,000, Q = 10,000, and Q = 20,000?

2. What supplier and order quantity do you recommend based on total supply chain costs?

3. Given your total supply chain cost analysis and the qualitative criteria in Exhibit 13.18, using a weighted scoring model of your own design, what are your summary scores for each supplier? 

In Exhibit 13.18

4. What are your final recommendations?

Transcribed Image Text:

Supplier Selection Criteria Delivery reliability Product quality Single supplier risks (sole sourcing) Product and customs uncertainty (obsolescence, fees, work stoppages, etc.) Sustainability practices (green supplier) Xiajing 3 m m 3 High 3 2 Rank Order (1 - worst, 5 - best) Medic USA 5 4 Moderate 5 3 Werkzeug 4 5 Moderate 4 5