.

Order cost to Thrax for an order placed with its current supplier, S/order=$=$500 Holding cost per set per per year=H=$5 The company currently pays S4 for each set of socks. -P The company uses a continuous review replenishment policy, and has IT systems in place that allow constant monitoring of key information. Last year, the company used an ROP under this policy of 1,500 units for all sock styles and an order quantity Q of 5,000 units for all sock styles. Potential Alternatives to Current Supply Chain Management The company has asked you to evaluate a number of alternatives to their current SCM practices, including at a minimum their choice of supplier, transportation modes, warehouse capacity, order quantities and safety stock. Alternative Suppliers The company has contacted potentinl alternative suppliers in China, who have offered the following information relative to the current supplier: Supplier Characteristic Current Supplier A Supplier B Unit Price, $/3-sock set $ 4.00 $ 2.50 $ 1.25 Order cost, S/order $ 500.00 $ 200.00 $ 600.00 Defect Rate 1.0% 3.0% 0.5% Financial condition of the firm Good Poor Fair Throx wants to use a single-sourcing strategy, so they want a recommendation about which supplier would be best. Thrux has decided to use the following weights in analyzing the suppliers: Supplier Characteristic Weight Unit Price, S/3-sock set 0.4 Order cost, $/order 0.3 Defect Rate 0.2 Financial condition of the firm 0.1 Alternative Transportation An alternative to their current transportation approach available to Throx is shipment by UPS Express Air from Shanghai to Richmond, which averages 3.5 days. The comparison of costs is Maersk Ocean Freight UPS AirExpress Transporation Supplier Characteristics (current) (Alternative) Units cost, S/sock set $ 1.50$ 3.00 Damage Rate 2.0% 1.0% Average Transit time, weeks 4 1 * No data are available about variation in transit times, so Throx assumes this is constant. 3 Order cost to Thrax for an order placed with its current supplier, S/order=$=$500 Holding cost per set per per year=H=$5 The company currently pays S4 for each set of socks. -P The company uses a continuous review replenishment policy, and has IT systems in place that allow constant monitoring of key information. Last year, the company used an ROP under this policy of 1,500 units for all sock styles and an order quantity Q of 5,000 units for all sock styles. Potential Alternatives to Current Supply Chain Management The company has asked you to evaluate a number of alternatives to their current SCM practices, including at a minimum their choice of supplier, transportation modes, warehouse capacity, order quantities and safety stock. Alternative Suppliers The company has contacted potentinl alternative suppliers in China, who have offered the following information relative to the current supplier: Supplier Characteristic Current Supplier A Supplier B Unit Price, $/3-sock set $ 4.00 $ 2.50 $ 1.25 Order cost, S/order $ 500.00 $ 200.00 $ 600.00 Defect Rate 1.0% 3.0% 0.5% Financial condition of the firm Good Poor Fair Throx wants to use a single-sourcing strategy, so they want a recommendation about which supplier would be best. Thrux has decided to use the following weights in analyzing the suppliers: Supplier Characteristic Weight Unit Price, S/3-sock set 0.4 Order cost, $/order 0.3 Defect Rate 0.2 Financial condition of the firm 0.1 Alternative Transportation An alternative to their current transportation approach available to Throx is shipment by UPS Express Air from Shanghai to Richmond, which averages 3.5 days. The comparison of costs is Maersk Ocean Freight UPS AirExpress Transporation Supplier Characteristics (current) (Alternative) Units cost, S/sock set $ 1.50$ 3.00 Damage Rate 2.0% 1.0% Average Transit time, weeks 4 1 * No data are available about variation in transit times, so Throx assumes this is constant. 3