Can anyone help answer this?

You work as a supply chain manager for Primo Caf Inc. Primo Caf is a small-sized manufacturer of stylish coffee makers. The company has three distinct coffee makers that it produces. The Bean Boiler is Primo Caf's most basic model. The main materials used in manufacturing the Bean Boiler are aluminum and plastic. There are lots of suppliers for these materials. At present, Primo Caf's total cost for producing a Bean Boiler is $13 per unit and the product is competitively priced at $20 per unit. There are lots of other coffee makers that are very similar to the Bean Boiler on the market. Still, sales of the Bean Boiler are very stable. The company reliably sells 24,625 to 25,375 units of this product per month. QUESTION #2 Primo Caf sources electronics that control the on/off function and the timer on the Family Man from California Tech Inc. The old design for these electronics had created a bottleneck, forcing Primo Caf to use California Tech Inc. However, a new design has brought the electronics in line with industry standards, opening up the possibility of many new suppliers for this item. As of yesterday, California Tech charged Primo Caf $3 per unit. But today, California Tech called Marco to tell him that the new design would require $0.50 in tooling costs for each item and therefore they needed to increase their sell price to $4.15. You have the following unit cost information for electronics from California Tech Inc. from yesterday. You also have the following information from a potential new supplier, Boston Electric Company. Boston Electric has said they would be willing to sell you the electronics for $4.16 per unit. California Tech Boston Electric DM DM $ 0.300 $ 0.350 DL $ 0.650 DL $ 0.550 OH OH $ 0.650 $ 1.300 COGS $ Tooling 1.500 $ 0.200 SG&A $ 0.150 COGS $ 2.500 SG&A TC $ 1.650 $ 0.250 Profit TC $ 2.310 $ 2.750 Sell Price Profit 3.960 $ 1.375 $ Sell Price $ 4.125 The Family Man is Primo Caf's mid-market offering. Primo Caf manufactures most of the Family Man in-house, but buys the glass pot and the electronics that control the on/off function and the timer. At present, final assembly of the in- house manufactured parts and the purchased sub-components occurs at Primo Caf's facility in Grand Rapids. Total cost for producing the Family Man is currently $32 per unit and each unit is sold for $34.99. The Family Man's sleek, artistic design and range of unique colors helps to distinguish it from a wide selection of similar products offered by competitors. Prices for direct competitors range from $25 to $45. Sales of the Family Man range from 19,400 to 20,600 units per month. You know the average overhead rate for this industry should be 120% and the average profit margin on these kinds of items should be around 50%, although not all suppliers apply these rates. The Caffissimo is Primo Caf's high-end offering. Primo Caf produces the external casing for the Caffissimo in-house, but buys all of the important sub- components from external suppliers. The most important sub-components for the Caffissimo are the gauges that regulate the temperature and pressure of the water as it is forced through the coffee grounds. The proper working of these gauges ensure that the Caffissimo produces a perfect cup of coffee at brewing. The Caffissimo's design is a closely held company secret. The machine has won industry awards both in terms of its coffee making process and its external looks. Currently, the Caffissimo costs $375 to produce and sells for $600. Because of the relatively high price and unique design, demand for the Caffissimo is difficult to predict. Over the past year, demand has ranged from 8,500 to 11,500 units per month. Marco likes California Tech Inc. because they have been willing to accommodate changes in demand. California Tech has also had an excellent track record in terms of getting the electronics to Primo Caf on time. Marco doesn't know much about Boston Electric except for the cost information above and he is somewhat hesitant to make the switch to an unknown supplier for this part. Apply the cost plus (should cost) framework presented in class to complete the questions below. Complete all calculations in the excel file that you will upload with your exam. 1. Based on this information, provide a complete cost plus analysis for each supplier that appropriately accounts for tooling costs - but leaves all other elements of the cost plus model the same. 2. Create a second cost plus analysis for each supplier that appropriately accounts for tooling costs - and makes any other adjustments that you think are relevant. 3. What might be an appropriate range of best and worst prices that you would want to consider when negotiating price with each supplier? 4. Marco wants a recommendation on what Primo Caf should do. Given the information above- and what you know about the product you are sourcing - what would you recommend? Why? You work as a supply chain manager for Primo Caf Inc. Primo Caf is a small-sized manufacturer of stylish coffee makers. The company has three distinct coffee makers that it produces. The Bean Boiler is Primo Caf's most basic model. The main materials used in manufacturing the Bean Boiler are aluminum and plastic. There are lots of suppliers for these materials. At present, Primo Caf's total cost for producing a Bean Boiler is $13 per unit and the product is competitively priced at $20 per unit. There are lots of other coffee makers that are very similar to the Bean Boiler on the market. Still, sales of the Bean Boiler are very stable. The company reliably sells 24,625 to 25,375 units of this product per month. QUESTION #2 Primo Caf sources electronics that control the on/off function and the timer on the Family Man from California Tech Inc. The old design for these electronics had created a bottleneck, forcing Primo Caf to use California Tech Inc. However, a new design has brought the electronics in line with industry standards, opening up the possibility of many new suppliers for this item. As of yesterday, California Tech charged Primo Caf $3 per unit. But today, California Tech called Marco to tell him that the new design would require $0.50 in tooling costs for each item and therefore they needed to increase their sell price to $4.15. You have the following unit cost information for electronics from California Tech Inc. from yesterday. You also have the following information from a potential new supplier, Boston Electric Company. Boston Electric has said they would be willing to sell you the electronics for $4.16 per unit. California Tech Boston Electric DM DM $ 0.300 $ 0.350 DL $ 0.650 DL $ 0.550 OH OH $ 0.650 $ 1.300 COGS $ Tooling 1.500 $ 0.200 SG&A $ 0.150 COGS $ 2.500 SG&A TC $ 1.650 $ 0.250 Profit TC $ 2.310 $ 2.750 Sell Price Profit 3.960 $ 1.375 $ Sell Price $ 4.125 The Family Man is Primo Caf's mid-market offering. Primo Caf manufactures most of the Family Man in-house, but buys the glass pot and the electronics that control the on/off function and the timer. At present, final assembly of the in- house manufactured parts and the purchased sub-components occurs at Primo Caf's facility in Grand Rapids. Total cost for producing the Family Man is currently $32 per unit and each unit is sold for $34.99. The Family Man's sleek, artistic design and range of unique colors helps to distinguish it from a wide selection of similar products offered by competitors. Prices for direct competitors range from $25 to $45. Sales of the Family Man range from 19,400 to 20,600 units per month. You know the average overhead rate for this industry should be 120% and the average profit margin on these kinds of items should be around 50%, although not all suppliers apply these rates. The Caffissimo is Primo Caf's high-end offering. Primo Caf produces the external casing for the Caffissimo in-house, but buys all of the important sub- components from external suppliers. The most important sub-components for the Caffissimo are the gauges that regulate the temperature and pressure of the water as it is forced through the coffee grounds. The proper working of these gauges ensure that the Caffissimo produces a perfect cup of coffee at brewing. The Caffissimo's design is a closely held company secret. The machine has won industry awards both in terms of its coffee making process and its external looks. Currently, the Caffissimo costs $375 to produce and sells for $600. Because of the relatively high price and unique design, demand for the Caffissimo is difficult to predict. Over the past year, demand has ranged from 8,500 to 11,500 units per month. Marco likes California Tech Inc. because they have been willing to accommodate changes in demand. California Tech has also had an excellent track record in terms of getting the electronics to Primo Caf on time. Marco doesn't know much about Boston Electric except for the cost information above and he is somewhat hesitant to make the switch to an unknown supplier for this part. Apply the cost plus (should cost) framework presented in class to complete the questions below. Complete all calculations in the excel file that you will upload with your exam. 1. Based on this information, provide a complete cost plus analysis for each supplier that appropriately accounts for tooling costs - but leaves all other elements of the cost plus model the same. 2. Create a second cost plus analysis for each supplier that appropriately accounts for tooling costs - and makes any other adjustments that you think are relevant. 3. What might be an appropriate range of best and worst prices that you would want to consider when negotiating price with each supplier? 4. Marco wants a recommendation on what Primo Caf should do. Given the information above- and what you know about the product you are sourcing - what would you recommend? Why