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Hubbard Industries is undertaking an analysis of supplier costs to evaluate each supplier's relative costs and performance. Currently, they are focusing attention on the two
Hubbard Industries is undertaking an analysis of supplier costs to evaluate each supplier's relative costs and performance. Currently, they are focusing attention on the two suppliers of door handles. The suppliers are SafePlus Ltd and Brush Finish Ltd. Hubbard has been dealing with these suppliers for several years. Most orders are placed with SafePlus Ltd since it charges only $7.20 per handle, whereas Brush Finish Ltd charges $6.80 per handle. In the past year, Hubbard purchased 30,000 handles from SafePlus Ltd and 5,000 handles from BrushFinish Ltd. For the most recent year, the following supplier-related activities and costs were identified: Activity Place purchase order Receive and inspect deliveries Store inventory Rework product due to poor quality material Production downtime due to poor quality material Receive and inspect late deliveries Total cost $25,000 $84,000 $8,000 $25,000 $5,000 $17.500 Number of activities 100 orders 400 deliveries 200 units stored per year 500 units reworked 100 hours downtime 50 late deliveries An analysis revealed that last year the following activities related to the two suppliers: Activity Place purchase order Receive and inspect deliveries Store inventory Rework product due to poor quality material Production downtime due to poor quality material Receive and inspect late deliveries Safe Plus Ltd 20 orders 200 deliveries 70 units per year 200 units 48 hours 40 late deliveries BrushFinish Ltd 10 orders 50 deliveries 16 units per year 10 units 4 hours 5 late deliveries Required: Question 3.1 Calculate the supplier performance index for each supplier. Show your detailed workings. (14 marks) Question3.2 Based on your calculations above, discuss the relative performance of each supplier, and what if anything the company should do. Explain. [Word limit: 150 words. Note the word count at the end of your answer] (6 marks) Question 3.3 'The looming supply disruption from coronavirus offers historical opportunities for companies to build or destroy customer goodwill (Byrnes & Wass, 2020). Discuss the statement. Your response should cover how an organisation can manage suppliers and maintain customer loyalty even after this pandemic crisis. TWord limit: 300 words. More the word count ot the end of your answer W NO
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