Question: Please help! Your company assembles five different models of a motor scooter that is sold in specialty stores in the United States. The company uses
Please help!
Your company assembles five different models of a motor scooter that is sold in specialty stores in the United States. The company uses the same engine for all five models. You have been given the assignment of choosing a supplier for these engines for the coming year. Due to the size of your warehouse and other administrative restrictions, you must order the engines in lot sizes of units. Because of the unique characteristics of the engine, special tooling is needed during the manufacturing process for which you agree to reimburse the supplier. Your assistant has obtained quotes from two reliable engine suppliers and you need to decide which to use. The following data have been collected:
Requirements annual forecast units
Weight per engine pounds
Order processing cost $ per order
Inventory carry cost percent of the average value of inventory per year
Note: Assume that half of lot size is in inventory on average units
Two qualified suppliers have submitted the following quotations:
ORDER QUANTITY SUPPLIER
UNIT PRICE SUPPLIER
UNIT PRICE
to unitsorder $ $
to unitsorder
unitsorder
Tooling costs $ $
Distance miles miles
Your assistant has obtained the following freight rates from your carrier:
Truckload lbs each load: $ per tonmile
Lessthantruckload: $ per tonmile
Note: Per tonmile lbs per mile.
a Calculate the total cost for each supplier. Round your answers to the nearest whole number.
a Which supplier would you select?
multiple choice
Supplier Correct
Supplier
b If you could move the lot size up to ship in truckload quantities, calculate the total cost for each supplier. Do not round intermediate calculations. Round "Required lot size for truckload" and final answers to the nearest whole number.
HINT: Use full truckload cost rates and the lowest feasible unit cost for all calculations. For example, if there are orders per year, dont split the orders into full truckloads and lessthantruckloads use the full truckload rate for all orders. For annual purchase cost, dont use two different unit costs for the complete orders and the partial orders use the lowest feasible unit cost for all purchase orders based on the lot size needed for a full truckload.
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