Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Suppliers in this supply chain are to be selected using the data provided in Section 2 of the spreadsheet. In this case, all suppliers offer

Suppliers in this supply chain are to be selected using the data provided in Section 2 of the spreadsheet. In this case, all suppliers offer a fixed order quantity. Multiple orders may be made from a single supplier, but the quantities per order are fixed. In addition, Supplier 1 has imposed a condition of exclusivity. This means that, if selected, the retailer can only utilise Supplier 1 to provide the replenishment orders. Supplier 2 and 3 do not have this constraint. However, Supplier 2 has an option where an additional incentive can be provided, which will increase the ordering cost and the reliability of replenishment orders. Not choosing the incentive option will decrease ordering costs and reliability. Supplier 3 has no restrictions on exclusivity or offers any incentive scheme. 1. Draw the structure of the decision tree for the supplier selection decision. 2. Given the probabilities that each supplier will make a single order delivery in full, calculate the following for each branch of the decision tree. a. Expected quantity delivered per order b. Total cost and cost per unit of generic product. 3. Consider your responses in Section 1 alongside your responses made in Section 2, Questions 1 and 2a and 2b. What configuration of supplier(s) would best fit the supply chain, at what order quantity? Why?

Price per unit Probability of Delivery in Full Order Quantity (fixed) Ordering Cost
Supplier 1 $ 0.20 100% 30000 $ 10,000
Supplier 2 (no incentive) $ 0.50 40% 5000 $ 8,000
Supplier 2 (Incentivised) $ 0.50 90% 5000 $ 18,000
Supplier 3 $ 0.70 60% 5000 $ 6,000

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Handbook Of Communication Audits For Organisations

Authors: Owen D.W. Hargie, Dennis Tourish

1st Edition

0415186420, 978-0415186421

More Books

Students also viewed these Accounting questions

Question

How can bartering improve a companys cash position?

Answered: 1 week ago