Dura Corporation makes metal frames for several world brands of portable home generators. They sell the frames to a wide variety of portable generator manufacturers such as DeWalt, DuroMax, Generac, Honda, and Husqvarna. The final product is sold in retail stores including Amazon, Home Depot, Lowes, and Walmart; farm and equipment stores like Tractor Supply Company, Rural King, and Northern Tool; and a limited number of brand dealership stores.

Hiroto Akiko is a new buyer for Dura. Mr. Akiko must decide the best supplier and order quantity for the wheels (Part# WH968) that attach to the metal frames. Four generators that are rated in the 10,000 to 30,000 watt range use the same frames and wheels. The generators weigh between 100 to 200 pounds. They require two heavy duty small wheels capable of handling the load and vibration. Hiroto is evaluating two wheel suppliers, Litar International and Cane Manufacturing. Exhibit 12.26 shows the quantity discounts for suppliers Litar and Cane.

Quantity Discount Schedules for Portable Generator Wheels Litar Discount Code

Order Size (Wheels)

Discount Percent (%)

Wheel Unit Cost ($) with Discount

A

0 to 9999

0

$12.00

B

10,000 to 19,999

6

$11.28

C

20,000 to 29,999

12

$10.56

Cane Discount Code

Order Size (Wheels)

Discount Percent (%)

Wheel Unit Cost ($) with Discount

D

0 to 4,999

0

$12.00

E

5,000 to 9,999

2

$11.76

F

10,000 to 19,999

6

$11.28

G

20,000 to 29,999

15

$10.20

A purchase order costs Dura Corporation $280 to process and complete. Annual demand is 25,000 wheels, with a purchase cost of $12.00 per wheel without volume discounts from either supplier. Duras inventory holding cost per wheel is 20 percent since the wheels are bulky and take up considerable warehouse space.

Besides cost, Hiroto must consider Dura Corporations delivery reliability, product quality, and sustainability criteria. Exhibit 12.27 summarized the performance on these three criteria for Litar and Came suppliers from past contracts.

A generator is mounted on a metal frame that has wheels on one side. The generator is plugged to a power source.

Suppliers Litar and Canes Delivery, Quality, and Green Purchasing Performance Performance Criteria

Relative Importance and Weight

Litars Ranking

Cane Ranking

Delivery reliability

0.35

4

3

Product quality

0.35

5

5

Green performance

0.30

2

4

The Dura Corporations green performance criteria include a measure of (1) the suppliers carbon footprint along the supply chain, (2) their efforts to minimize waste and the release of pollutants into Earths biosphere, (3) recycling materials and processes, and (4) building and energy conservation. Each of these performance categories is measured by several metrics and summarized into a final score for each supplier.

Case Questions for Discussion Do some research on green purchasing. Based on your research, write a paragraph or two explaining green purchasing and provide some examples.

What order quantities would you recommend for suppliers Litar and Cane, taking into account the quantity discounts. What would the total annual cost for each supplier be and which one should be selected? Use the Quantity Discount Excel template for your analysis.

Develop a method to evaluate the cost as well as the reliability, quality and green performance criteria and make a final recommendation on which supplier to choose. Clearly explain your reasoning.