A major automobile manufacturer located in Georgetown, Kentucky, has two certified vendors that produce brake pads with the information shown in Exhibit 13.14. New Albany Manufacturing is located in Columbus, Ohio, and LaPlaya Manufacturing is located in Monterrey, Mexico. The automobile assembly factory is assumed to operate 250 days per year.

a. Use the Total Supply Chain Cost Excel template to compute the supply chain costs associated with each supplier if the annual demand is 1,000,000 brake pads?

b. What supplier and order quantity do you recommend based on total costs?

c.. List other criteria you might use to make the final supplier decision.

d. What will you tell the supplier that is not awarded the brake pad order? 

Transcribed Image Text:

EXHIBIT 13.14 Automobile Manufacturer's Two Certified Supplier Decision Oversight Cost per Unit (0) Certified Supplier New Albany Mfg. LaPlaya Mfg. Order Size (Q) 50,000 100,000 Price per Unit (P) $11.80 $10.85 $0.00 $0.46 Transport Cost per Unit (C₂) $0.90 $1.25 Order Cost (C) $155 $195 Cost to Store One Unit One Year (C₂) $1.45 $1.10 Oder Lead Time in Days (L) 45 100