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Take a closer look at the logistics costs. Find 2 ways to potentially reduce the total annual cost? Provide a TCO analysis for each supplier
Take a closer look at the logistics costs. Find 2 ways to potentially reduce the total annual cost? Provide a TCO analysis for each supplier to show how total landed cost might change
Hint: Focus on logistics costs! (e.g., renegotiation of the per-unit purchase cost is not a viable option). Your process to this part of the case might involve some trial and error.
EOQ Calculation Nagashi 48051 2400 Annual Demand Ordering Cost ($/order) Annual Inventory Carrying Cost (%) Cost per unit (VND) Cost per unit ($) EOQ Service Level 95% Z score Std Deviation of LT Lead Time Std deviation of demand during LT Safety Stock 24% 270000 12.83 8656.40418 1.64 1.571 28 209.584 343.7176497 48051 2400 24% EOQ Calculation Sichuan Annual Demand Ordering Cost ($/order) Annual Inventory Carrying Cost (%) Cost per unit (Yuan) Cost per unit ($) EOQ Service Level 95% Z score Std Deviation of LT Lead Time Std deviation of demand during LT Safety Stock 79 12.75 8681.353655 1.64 2.34 25 312.3483836 512.2513492 EOQ Calculation Duluth Annual Demand Ordering Cost ($/order) Annual Inventory Carrying Cost (%) Cost per unit ($) EOQ Service Level 95% Z score Std Deviation of LT Lead Time Std deviation of demand during LT Safety Stock 48051 800 24% 15.5 4546.107871 1.64 1.07 142.8285884 234.2388849 Duluth (DCI) TCO cost components Total (Annual cost) 744,790.50 8,000.00 17,050.00 Purchasing Cost Tooling Cost Domestic Shipping Cost Foreign Shipping Cost Tariffs and Duties Quality non-conformance Safety Stock (purchasing cost) Holding Cost of In-transit Inventory Holding Cost of safety stock Holding Cost of cycle stock Ordering Cost Total Cost Sichuan (SMF) Nagashi (NI) Per Unit cost of annual demand Total (Annual cost) Per Unit cost of annual demand Total (Annual Per Unit cost $ 15.50 $ 612,717.04 $ 12.75 $616,254.08 $ 12.83 $ 0.17 $ 4.035.25 $ 0.08 $ 6,175.00 $ 0.13 $ 0.35 $ 26,400.00 $ 0.55 $ 26,400.00 | $ 0.55 $ 63,918.36 $ 1.33 $ 56,430.00 | $ 1.17 $ 30,635.85 $ 0.64 $ 30,812.70 | $ 0.64 $ 1.75 $ 105,111.56 $ 2.19 $105,111.56 | $ 2.19 234.23 $ 6,531.92 $ 512.23 $ 4,408.18 $ 343.68 12% 3625.546685 12% 4661.71055 12% 24% $ 1,567.66 24% $ 1,057.96 24% 24% $ 13,283.92 24% $ 13,322.21 24%) 14,400.00 $ 14,400.00 $882,227.11 $879,033.40 84,089.25 3,630.70 734.5878904 871.37 8,455.76 8,800.00 $876,422.17 01 EOQ Calculation Nagashi 48051 2400 Annual Demand Ordering Cost ($/order) Annual Inventory Carrying Cost (%) Cost per unit (VND) Cost per unit ($) EOQ Service Level 95% Z score Std Deviation of LT Lead Time Std deviation of demand during LT Safety Stock 24% 270000 12.83 8656.40418 1.64 1.571 28 209.584 343.7176497 48051 2400 24% EOQ Calculation Sichuan Annual Demand Ordering Cost ($/order) Annual Inventory Carrying Cost (%) Cost per unit (Yuan) Cost per unit ($) EOQ Service Level 95% Z score Std Deviation of LT Lead Time Std deviation of demand during LT Safety Stock 79 12.75 8681.353655 1.64 2.34 25 312.3483836 512.2513492 EOQ Calculation Duluth Annual Demand Ordering Cost ($/order) Annual Inventory Carrying Cost (%) Cost per unit ($) EOQ Service Level 95% Z score Std Deviation of LT Lead Time Std deviation of demand during LT Safety Stock 48051 800 24% 15.5 4546.107871 1.64 1.07 142.8285884 234.2388849 Duluth (DCI) TCO cost components Total (Annual cost) 744,790.50 8,000.00 17,050.00 Purchasing Cost Tooling Cost Domestic Shipping Cost Foreign Shipping Cost Tariffs and Duties Quality non-conformance Safety Stock (purchasing cost) Holding Cost of In-transit Inventory Holding Cost of safety stock Holding Cost of cycle stock Ordering Cost Total Cost Sichuan (SMF) Nagashi (NI) Per Unit cost of annual demand Total (Annual cost) Per Unit cost of annual demand Total (Annual Per Unit cost $ 15.50 $ 612,717.04 $ 12.75 $616,254.08 $ 12.83 $ 0.17 $ 4.035.25 $ 0.08 $ 6,175.00 $ 0.13 $ 0.35 $ 26,400.00 $ 0.55 $ 26,400.00 | $ 0.55 $ 63,918.36 $ 1.33 $ 56,430.00 | $ 1.17 $ 30,635.85 $ 0.64 $ 30,812.70 | $ 0.64 $ 1.75 $ 105,111.56 $ 2.19 $105,111.56 | $ 2.19 234.23 $ 6,531.92 $ 512.23 $ 4,408.18 $ 343.68 12% 3625.546685 12% 4661.71055 12% 24% $ 1,567.66 24% $ 1,057.96 24% 24% $ 13,283.92 24% $ 13,322.21 24%) 14,400.00 $ 14,400.00 $882,227.11 $879,033.40 84,089.25 3,630.70 734.5878904 871.37 8,455.76 8,800.00 $876,422.17 01Step by Step Solution
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