How do Calculate the total cost of ownership per unit and Supplier Performance Index of Kong Pulp & Paper Mills (KPPM), and Bonn Paper Company (BPC) for the two following options: 

(i)Standard publishing paper and road freight using Mainfreight. 

(ii)Green e-certified publishing paper and rail freight using KiwiRail. 

Next, how do I compare the relative financial performance of the two suppliers for both options in part (a). Using the information from the case, outline (with reasons) TWO key non-financial factors that PBP should consider when deciding which paper supplier, paper type, and/or freight option to use. Use the information in parts (a) to (c) to make recommendations on whether PBP should use: 

(i)KPPM or BPC paper supplier; 

(ii)Standard publishing paper or Green e-certified publishing paper type; and 

(iii)Road or rail freight option, 

Briefly state the reasoning for your recommendations.  

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It transpires that the current purchase agreements with the paper suppliers are up for renewal next month and Pearl suggests that it may be a good time to reconsider who PBP purchases paper from. She asks Kyle to get his staff to come up with some information regarding the current suppliers. Kyle presents the required information at the next meeting. As explained by Kyle, PBP currently purchases around 40,000 reams of paper (each ream contains 500 sheets) from two main publishing paper suppliers, one in Hong Kong (Kong Pulp & Paper Mills - KPPM, which owns pulp and paper mills in New Zealand) and the other in Germany (Bonn Paper Company BPC). Both can supply green e-certified paper at $36 per ream as well as a standard publishing paper at $24 a ream. - KPPM currently supplies PBP with 15,000 reams of publishing paper, while BPC currently supplies 25,000 reams per annum. It costs $2,000 per 5,000 reams to ship the paper from Hong Kong and $6,000 per 5,000 reams to ship it from Germany. Once the publishing paper arrives in Wellington it is transported by road, using Mainfreight, to Palmerston North; a distance of 140 km. It costs $100 to deliver 20 boxes, each containing 5 reams of paper. However, KiwiRail has offered to freight the paper by train and to deliver 20 boxes for $80. This price per 20 boxes, does not change even if 100 or 1,000 boxes are delivered in a single shipment. It transpires that the current purchase agreements with the paper suppliers are up for renewal next month and Pearl suggests that it may be a good time to reconsider who PBP purchases paper from. She asks Kyle to get his staff to come up with some information regarding the current suppliers. Kyle presents the required information at the next meeting. As explained by Kyle, PBP currently purchases around 40,000 reams of paper (each ream contains 500 sheets) from two main publishing paper suppliers, one in Hong Kong (Kong Pulp & Paper Mills - KPPM, which owns pulp and paper mills in New Zealand) and the other in Germany (Bonn Paper Company BPC). Both can supply green e-certified paper at $36 per ream as well as a standard publishing paper at $24 a ream. - KPPM currently supplies PBP with 15,000 reams of publishing paper, while BPC currently supplies 25,000 reams per annum. It costs $2,000 per 5,000 reams to ship the paper from Hong Kong and $6,000 per 5,000 reams to ship it from Germany. Once the publishing paper arrives in Wellington it is transported by road, using Mainfreight, to Palmerston North; a distance of 140 km. It costs $100 to deliver 20 boxes, each containing 5 reams of paper. However, KiwiRail has offered to freight the paper by train and to deliver 20 boxes for $80. This price per 20 boxes, does not change even if 100 or 1,000 boxes are delivered in a single shipment.

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