logistics
1. INSTRUCTIONS: Solve the following problem using Total Cost of Ownership: A buyer received bids and other relevant information from three suppliers for a vital component part for its latest product. Given the following information, use total cost analysis to determine which supplier should be chosen. Late delivery of the compo- nent results in 60 percent lost sales and 40 percent back orders of finished goods. Order lot size Requirements (annual forecast) Weight per engine Order processing cost Inventory carrying rate Cost of working capital Profit margin Price of finished goods Back order cost 2,000 240,000 units 40 pounds $500/order 20% per year 10% per year 15% $12.000 $150 per unit ORDER SIZE SUPPLIER 1 SUPPLIER 2 SUPPLIER 3 $220.00 per unit 1 to 999 units/order 1,000 to 2,999 units/order 3,000+ units/order Tooling Cost Terms Distance Supplier Quality Rating Supplier Delivery Rating $250.00 per unit $240.00 per unit $230.00 per unit $15,000 2/10, net 30 120 miles $235.00 per unit $230.00 per unit $225.00 per unit $12.000 1/15, net 30 100 miles $215.00 per unit $18,000 1/10, net 30 150 miles 3% 1% 2% 2% 1% 3% Truckload (TL > 40,000 lbs): $0.95 per ton-mile Less-than-truckload (LTL): $1.20 per ton-mile Note: per ton-mile = 2,000 lbs per mile 1. INSTRUCTIONS: Solve the following problem using Total Cost of Ownership: A buyer received bids and other relevant information from three suppliers for a vital component part for its latest product. Given the following information, use total cost analysis to determine which supplier should be chosen. Late delivery of the compo- nent results in 60 percent lost sales and 40 percent back orders of finished goods. Order lot size Requirements (annual forecast) Weight per engine Order processing cost Inventory carrying rate Cost of working capital Profit margin Price of finished goods Back order cost 2,000 240,000 units 40 pounds $500/order 20% per year 10% per year 15% $12.000 $150 per unit ORDER SIZE SUPPLIER 1 SUPPLIER 2 SUPPLIER 3 $220.00 per unit 1 to 999 units/order 1,000 to 2,999 units/order 3,000+ units/order Tooling Cost Terms Distance Supplier Quality Rating Supplier Delivery Rating $250.00 per unit $240.00 per unit $230.00 per unit $15,000 2/10, net 30 120 miles $235.00 per unit $230.00 per unit $225.00 per unit $12.000 1/15, net 30 100 miles $215.00 per unit $18,000 1/10, net 30 150 miles 3% 1% 2% 2% 1% 3% Truckload (TL > 40,000 lbs): $0.95 per ton-mile Less-than-truckload (LTL): $1.20 per ton-mile Note: per ton-mile = 2,000 lbs per mile
