6. Northcutt manufactures high-end racing bikes and is looking for a source of gear sprocket sets. Northcutt would need 1550 sets a month. Supplier A is a domestic firm, while Suppliers B and C are located overseas. Cost information for the suppliers is as follows:

■ Supplier A—Price of $100 per set, plus packing cost of

$2 per set. Total inland freight costs for all 1550 units would be $800 per month.

■ Supplier B—Price of $96 per set, plus packing cost of

$3.50 per set. International transportation costs would total $3500 per month, while total inland freight costs would be $800 per month.

■ Supplier C—Price of $93 per set, plus packing cost of

$3.00 per set. International transportation costs would total $5000 per month, while total inland freight costs would be $1000 per month.

a. (**) Calculate total landed costs per unit and per month for the three potential suppliers. Who is the cheapest? Who is the most expensive?

b. (***) Suppose that international and inland freight costs are fixed for volumes up to 4000 units a month.

Under this assumption, which supplier would have the lowest landed cost if demand was cut in half? If demand doubled? Whose landed cost is most sensitive to volume changes?

c. (**) What factors other than landed costs might Northcutt consider when selecting the supplier?

(Hint: Incorporate what you learned in the chapters on quality, sourcing, and purchasing.)