Appendix A: Case Study and Questions $$ VoltCycle Canada

VoltCycle Canada $($VoltCycle$)$ is a Canadian manufacturer of electric bicycles. VoltCycle

assembles five electric bicycle models that are sold in specialty stores in Canada. VoltCycle uses

the same motor for all five models. You work in the supply department at VoltCycle and have

been assigned to choose a supplier for these motors for the coming year.

Company Information

VoltCycle Canada is a Canadian manufacturer of electric bicycles. Find below some company

information:

Mission: VoltCycle Canada is committed to revolutionizing urban transportation by providing

sustainable, efficient, and accessible electric bicycles that empower individuals to embrace ecofriendly commuting options.

Vision: Our vision at VoltCycle Canada is to lead the way in transforming urban mobility,

fostering healthier communities, and reducing environmental impact through innovative electric

bicycle solutions.

Values:

$1.$ Sustainability: We prioritize environmentally friendly practices in all aspects of our

operations, from product design to manufacturing processes.

$2.$ Quality: We are dedicated to delivering premium$-$quality electric bicycles that exceed

customer performance, durability, and design expectations.

$3.$ Accessibility: We strive to make electric bicycles accessible to people of all ages and

backgrounds, promoting inclusivity and diversity in cycling culture.

$4.$ Customer$-$Centricity: We prioritize customer satisfaction by offering exceptional service,

support, and engagement throughout the customer journey.

$5.$ Innovation: We embrace continuous innovation and technological advancement to stay at

the forefront of the electric bicycle industry, driving positive change in urban mobility.

Objectives:

$1.$ Market Leadership: Become Canada's leading electric bicycle provider by capturing a

significant market share within the next three years.

$2.$ Product Innovation: Continuously innovate our product lineup to introduce new features,

designs, and technologies that enhance performance and user experience.

$3.$ Sustainable Practices: Implement sustainable manufacturing processes and sourcing

strategies to minimize environmental impact and promote eco$-$conscious production.

$4.$ Community Engagement: Foster a strong community of electric bicycle enthusiasts

through events, partnerships, and advocacy initiatives that promote cycling culture and

sustainable living.

$5.$ Profitability: Achieve sustainable growth and profitability while maintaining a competitive

pricing strategy that ensures affordability and value for our customers. $($OpenAI$,$ n$.$d$.)$

Motor Sourcing Decision

The motor has unique characteristics, and special tooling is needed during manufacturing.

VoltCycle will reimburse the supplier for the upfront, one$-$time cost of special tooling. You have

obtained quotes from two reliable motor suppliers and must decide which to use. The following

data have been collected:

Requirement $($annual forecast$)20,000$ units

Weight per motor $4\mathrm{.}5$ kg

Order processing costs $$175$ per order

Inventory carrying costs $25\%$ of the average value of inventory per year

Note: Assume that half of the order size is in inventory on average $($i$.$e$.,$ if the order size is

$1,000$: $1,000/2=500$ units, that is the average inventory$).$

Two qualified suppliers have submitted the following quotations:

Order Quantity Supplier $1$ Unit Price Supplier $2$ Unit Price

$1$ to $1,499$ units$/$order $$475$ $$465$

$1,500$ to $2,999$ units$/$order $$465$ $$464$

$3,000+$ units$/$order $$455$ $$460$

Other Information:

Supplier $1$ Supplier $2$

Special Tooling costs $$32,000$ $$29,000$

Distance $($between supplier plant

and VoltCycle warehouse$)$

$300$ km $350$ km

VoltCycle is responsible for the transportation of the motors from the supplier$$s plant to the

VoltCycle warehouse. If the weight of the load $($determined by the order quantity multiplied

by the weight per motor$)$ does not meet the minimum weight required for a Truckload, you

must use the Less$-$than$-$truckload rate to calculate the transportation costs. You have

obtained the following freight rates from VoltCycle$$s carrier:

Truckload $($minimum weight $15,500$ kg each

load; maximum weight $19,900$ kg each load$)$:

$$2\mathrm{.}25$ per tonne$-$km

Less$-$than$-$truckload $($LTL$)$: $$3\mathrm{.}35$ per tonne$-$km

Note: per tonne$-$km $=$ cost of transportation of one tonne $(1,000$kg$)$ over one kilometre

Questions:

a$.$ Perform a total cost of ownership analysis and determine which supplier has the lowest

total cost for purchasing the annual requirement of motors using an order quantity of

$1,000$ units.

b$.$ Is it more economical to order in truckload quantities? Redo the total cost of ownership

analysis with an order size representing a full truckload $($between the minimum and

maximum weight limit for Truckload shipments$).$ All orders should have the same

quantity. Would your supplier selection change if you ordered truckload quantities?