Alpha Medical Manufacturing (AMM), located in Punta Gorda, Florida, produces medical devices for orthopedic surgery including replacement parts for human knees, hips, and elbows, and surgical tools. One product they assemble in their factory is a special aluminum-alloy surgical screw used to anchor human tissue to the bone. The screw consists of four component parts, one being the aluminum alloy while the other three parts are made of medical grade plastics. AMM is evaluating three Tier 1 suppliers to manufacture the aluminum part of the orthopedic screw. Annual demand for this item is 20,000 units per year, with 365 days in a year. Other information is shown in Exhibit 12.10.

Exhibit 12.10 Alpha Medical Manufacturing (AMM) Outsourcing Information for a Surgical Screw

(a) What is the total annual logistics cost for each supplier when Q = 10,000 and Q = 20,000?
(b) What supplier and order quantity do you recommend based on these total costs?
(c) List other criteria you might use to make the final supplier decision, and suggest metrics for measuring each criteria?

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Contract Manufacturer (Tier 1 Supplier) Price per Unit @ Q = Price per Tariff | Unit (C) @ | Cost (T.) | 10,000 (C) Q-20,000 per Unit(Tm) per Unit Transport Mode Cost Order Cost to Store Order | Costs (C.) | One Unit per | Lead Time | Year (C) in Days S1.35 $1.00 S1.10 $0.20 S0.35 S655 Xiajing Supplier S0.82 180 Boston $1.25 S1.15 S0.00 S0.15 $260 90 Medical ul er Werkzeug S1.35 $1.00 S0.10 S0.20 S350 S1.05 120 Supplier