Question: Due to increased demand for Covid - 1 9 testing, the RCAD is reassessing its testing kit ordering policy. Presently, kits are ordered every five

Due to increased demand for Covid-19 testing, the RCAD is reassessing its testing kit ordering policy. Presently, kits are ordered every five weeks from the supplier, a practice initiated five years ago due to the supplier's insistence. However, a year ago, a new Chinese supplier took over, removing the previous five-week ordering requirement. Despite this change, RCAD has continued with the same ordering system. Khaled Ramadan, the purchasing manager, is hesitant to change without a compelling reason, citing time constraints and a reluctance to overhaul the existing process. Additional details from Khaled highlight a $30 cost for ordering and receiving each shipment of testing kits, with the RCAD consuming an average of 90 kits per week. Information from Maha Saleh in Accounting reveals a weekly carrying cost of $0.07 per testing kit. The supplier has maintained reliability in deliveries, typically fulfilling orders within five working days of being faxed. Khaled believes that, for now, variability in lead time is minimal.This report aims to investigate further into RCADs testing kits current order policy, to highlight the current costs, and find out if cost saving improvements can be made to the ordering intervals, and provide criteria for selecting new suppliers in case of a sudden change. Overall, the main goal is to present RCAD with the best recommendations to optimize costs and prepare for any disruptions in supply.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related General Management Questions!