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Awesome Products Company manufactures a product sold to retailers. It is considering suppliers for its process. The supplier quality involves four activity areas: Activity Area
Awesome Products Company manufactures a product sold to retailers. It is considering suppliers for its process. The supplier quality involves four activity areas:
Activity Area | Cost Driver and Rate |
Order cost | $120 per purchase order |
Defective units | $200 per unit internal failure costs |
Delivery trips | $5 per delivery mile |
Carrying cost | $1 per order |
The following supplier information is given:
X3 | Y2 | Z1 | |
Materials units needed | 100,000 | 100,000 | 100,000 |
Actual purchase price | $5 | $4.99 | $5.01 |
Number of purchase orders | 20 | 30 | 18 |
Number of defects | 6 | 12 | 0 |
Number of deliveries | 20 | 30 | 18 |
Which supplier has the most defective units?
a.Z1
b.Y2
c.X3
d.They are equal.
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