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Alison's Accessories is a high volume worldwide fashion house with outlets in 65 countries. Sadly, space does not permit an exhaustive list but once the

Alison's Accessories is a high volume worldwide fashion house with outlets in 65 countries. Sadly, space does not permit an exhaustive list but once the test is over, check out their website. Kalil, the supply chain manager is conducting her usual thorough analysis of her final four candidates for supplier and has developed the following tables of pertinent costs and other shipping metrics. Regardless of supplier, Alison's Accessories will operate 220 days per year and has forecast annual demand of 250,000 units. Kalil has obtained quotes for three different shipment sizes (Freight Costs table). All costs are in US Dollars.

 

Table 1

 

Unit costs

 

Supplier

Price/Unit

Carrying Cost

A

123

22

B

125

19

C

126

18

D

100

40

 

Annual Freight Costs

 

Supplier

15,000 units

25,000 units

50,000 units

A

380,000

260,000

237,000

B

615,000

547,000

470,000

C

285,000

240,000

200,000

D

380,000

260,000

237,000

 

Other Costs

 

Supplier

Lead Time

Annual Admin Costs

A

30

250,000

B

15

275,000

C

7

225,000

D

90

2,500,000

 

 

Use the date in Table 1. Analyze costs and make recommendations regarding the shipping options and suppliers. Which combination of shipping amount and supplier yields the lowest total cost?

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