6 Example 1 7 Given the following information, use total cost analysis to determine which supplier is more cost-effective. The buyer needs to receive the product within 25 days from when they place the order. 3 10 Monthly usage 11 Order Frequency 12 Order Processing Cost 13 Inventory Carrying Cost 14 Weight per Unit 15 Volume per unit 16 Cost of working capital $ 17 16 Purchase Cost - Volume Dependent 19 20 21 22 23 24 25 26 Freight Company "USF Freight Distance 27 Freight Costs 26 Air Freight - Cost per Pound pr $ 29 Truck Freight - Cost per Cubic S 30 31 Transportation leadtime (day: 1 to 500 miles 32 Truck Mode 33 Air Mode Cost 3000 units every If more than this many up to this many units per order units per order 1 to 500 miles 95 dollars. 30% annually 40 pounds 8 cubic feet 10% annually 33 40 Based on the information given in the problem: 41 What is the TCO for each supplier? 42 Which supplier should they choose? 1 2500 5000 9000 + 0.320 $ 0.011 $ 5 2 2 months Supplier A Supplier B 200 $ 190 $ 185 $ 183 $ 2499 $ 4999 $ 8499 $ $ Distance 500 miles to 1000 miles 0.290 0.010 500 miles to 1000 miles 3 34 35 Other Supplier Information 36 Production Leadtime (assume they can start manufacturing the day after th 31 Special Equipment Cost for this customer $ 38 Distance from buyer manufacturing facility 200 187 183 180 14 21 8,000 $9,000 550 480 miles

7 Given the following information, use total cost analysis to determine which supplier is more cost-effective - The buyer needs to receive the product within 25 days from when they place the order. 3 10 Monthly usage 11 Order Frequency 12 Order Processing Cost 13. Inventory Carrying Cost 14 Weight per Unit is Volume per unit 15. Cost of working capital 3000 units every 2 months 95 dollars 30% annually 40 pounds 8 cubic feet 10% annually ir Purchase Cost-Volume Dependent If more than this many up to this many units per order units per order Supplier A Supplier 8 \begin{tabular}{|c|c|c|c|c|c|} \hline 1 & 2499 & $ & 200 & $ & 200 \\ \hline 2500 & 4999 & $ & 190 & $ & 187 \\ \hline 5000 & 8499 & $ & 185 & $ & 183 \\ \hline 9000+ & & $ & 183 & $ & 180 \\ \hline \end{tabular} Cost Freight Company "USF Freight' Distance Freight costs Air Freight-Cost per Pound pl \$ Truck Freight-Cost per Cubic \$ Distance 27 Freight Costs 1 to 500 miles 29 30 1 Transportation leadtime (day: 1 to 500 miles 32. Truck Mode 39. Air Mode \begin{tabular}{|c|c|c|c|c|c|c|} \hline & & & & & & \\ \hline & \multicolumn{3}{|c|}{500 miles to 1000 miles } & & & \\ \hline 0320 & $ & 0290 & & & & \\ \hline \multirow[t]{2}{*}{0.011} & $ & 0.010 & & & & \\ \hline & \multicolumn{3}{|c|}{500 miles to 1000 miles } & & & \\ \hline 5 & & 8 & & & & \\ \hline 2 & & 3 & & & & \\ \hline \multicolumn{4}{|c|}{ nanufacturing the day after th } & 14 & 21 & \\ \hline & & & \$ & 8,000 & $9,000 & \\ \hline & & & & 550 & 480 & miles \\ \hline \end{tabular} Other Supplier information: Production Leadtime (assume they can start manufacturing the day after th Special Equipment Cost for this customer Distance from buyer manufacturing facility 8,000550$9,000480miles Based on the information given in the problem: 41 What is the TCO for each supplier? $2 Which supplier should they choose