Question: Please fill out all Excel tables by either multiplying or dividing. QUESTION #1-Total Cost Analysis Primo Caf Inc. has been doing well. Revenue from its

Please fill out all Excel tables by either multiplying or dividing.
Please fill out all Excel tables by either multiplying or dividing. QUESTION
\#1-Total Cost Analysis Primo Caf Inc. has been doing well. Revenue from
its three lines of coffee makers have exceeded expectations. In fact, things

QUESTION \#1-Total Cost Analysis Primo Caf Inc. has been doing well. Revenue from its three lines of coffee makers have exceeded expectations. In fact, things have been going so well that Elise, the company's sinnovative CEO and founder, has decided Primo Caf should offer its own brand of coffee beans. Gianna, the chief marketing officer, has already come up with a name - Pripo's Premium Coffee - and estimates the company can sell 8mmn to 10,000 pounds of coffee per month at $15 per pound. There's only one thing left to do - find a supplier for the coffee bearis. Marco, the coO and your boss, has given you the task of finding a supplier and you've narrowed the field to two candidates: African Coffee Unlimited UC., located in Uganda, and South American Espresso Company, located in Colombia. You've come up with the following cost information for both suppliers. Duties on imports are 5% of the price for both suppliers. African Coffee Unlimited will be shipping to the Port of Long Beach in California, where port handling fees are 8% of the price of a container. Once the beans are offloaded in California, they will be transported via truck 2,190 miles to Erimo's Grand Rapids facility. South American Espresso Company will be shipping to the Port of Charleston in South Carolina, where port handling fees are 13% of the price of a container. Once the beans are offloaded in South Carolina, they will be transported via truck 955 miles to Erive's Grand Rapids facility. Prime's warehousing costs in Grand Rapids will be the same for both - 550 per pallet. As with any perishable product, spoilage is a concern. Your best estimate is that - for both suppliers ahout 2.5% of the beans will not survive the trip and will have to be discarded after reaching Eiipe's warehouse. You also know that for a standard product like coffee, there are 250 pounds of coffee per pallet and 160 pallets per 40 -foot (40) container. 1. Based on this information, provide a complete total cost analysis for each supplier (per pound, per pallet, and per container). Complete the worksheet in excel. 2. What is the cost per pound from each supplier? 3. Identify two costs areas - other than price - that Primo Caf should focus on to decrease total cost. Give the percentages associated with each of the cost drivers that you identify. Explain why you choose those cost areas. 4. Given that there is 40,000 pounds of coffee per 40 -foot (40) container, then each container load will be 4 - 5 months of demand. To reduce warehousing cost and spoilage, you want to evaluate using a 20 -foot (20) container instead of the 40 container. Note that "price per pound", "shipping to port of export", "trucking cost", "duties", "port handling fees" are the numbers or percentages as stated above in this case. However, a 20 container holds 80 pallets with each pallet holding 250 pounds of coffee. Warehousing cost will be reduced from $50/ pallet to $25/ pallet for a 20 container. Spoilage will be reduced from 2.5% to 2.0% for a 20 container. Copy your 40 container worksheet into another worksheet for a 20 container analysis to understand if lower warehousing and spoilage costs will offset the cost of using a 20 container. 5. 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? Please recommend a supplier and also the most cost effective shipping method (20' or 40 container). Why? B 1 Conversions Price / pound $0.93/ pound $0.95 /pound Pounds/Pallet Pounds/Container

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!