Question
Northcutt manufactures high-end racing bikes and is looking for a source of gear sprocket sets. Northcutt would need 1,600 sets a month. Supplier A is
Northcutt manufactures high-end racing bikes and is looking for a source of gear sprocket sets. Northcutt would need 1,600 sets a month. Supplier A is a domestic firm, and Suppliers B and C are located overseas. Cost information for the suppliers is as follows:
Supplier APrice of $110 per set, plus packing cost of $3.00 per set. Total inland freight costs for all 1,600 units would be $850 per month.
Supplier BPrice of $106 per set, plus packing cost of $3.00 per set. International transportation costs would total $3,600 per month, while total inland freight costs would be $500 per month.
Supplier CPrice of $63 per set, plus packing cost of $3.50 per set. International transportation costs would total $5,300 per month, while total inland freight costs would be $1,150 per month.
a. The total landed cost per unit for Supplier A is $ (Enter your response rounded to two decimal places.) The total landed cost per month for Supplier A is $. (Enter your response as a whole number.) The total landed cost per unit for Supplier B is $ (Enter your response rounded to two decimal places.) The total landed cost per month for Supplier B is $ (Enter your response as a whole number.) The total landed cost per unit for Supplier C is $(Enter your response rounded to two decimal places.) The total landed cost per month for Supplier C is $ (Enter your response as a whole number.) Supplier is the least expensive. Supplier is the most expensive. b. Suppose that international and inland freight costs are fixed for volumes up to 4,000 units a month. Supplier has the lowest landed cost if demand was cut in half. Supplier has the lowest landed cost if demand is doubled. The landed cost of Supplier is most sensitive to volume changesStep by Step Solution
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