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Q1. ABCD is going to purchase an auto parts component from one of two competing suppliers and it is going to base its decision, in
Q1. ABCD is going to purchase an auto parts component from one of two competing suppliers and it is going to base its decision, in part, on the supply chain performance of the two suppliers. The company has obtained the following data for average raw materials, work-in-process, and finished goods inventory value, as well as cost of goods sold for the suppliers. Assume each supplier operates 50 weeks per year.
Supplier 1 | Supplier 2 | |
Cost of goods sold | $8,500,000 | $14,800,000 |
Raw materials | 255,000 | 870,000 |
Work-in-process | 62,000 | 550,000 |
Finished goods | 33,000 | 180,000 |
- Determine which supplier has the best supply chain performance according to inventory turns and weeks of supply.
- What other factors would the company likely take into account in selecting a supplier?
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