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MBA,MCS,M.phil
Devry University
Jan-2008 - Jan-2011
MBA,MCS,M.Phil
Devry University
Feb-2000 - Jan-2004
Regional Manager
Abercrombie & Fitch.
Mar-2005 - Nov-2010
Regional Manager
Abercrombie & Fitch.
Jan-2005 - Jan-2008
Given the following information, use total cost analysis to determine which supplier is more cost-effective. Late delivery of raw material results in 60 percent lost sales and 40 percent back orders if finished goods.
|
Order lot size |
 |
|
Requirements (annual forecast) |
120000 units |
|
Weight per engine |
22 pounds |
|
Order processing cost |
125/ Order |
|
Inventory caring rate |
20% per year |
|
Cost of working capital |
10% per year |
|
Profit margin |
15% |
|
Price of finished goods |
 |
|
Back order cost |
$15 per unit |
|
Unit price |
Supplier 1 |
Supplier 2 |
|
1 to 999 units/order |
 |  |
|
1000 to 2999 units/order |
 |  |
| Â | Â | Â |
|
Tooling cost |
 |  |
|
Terms |
2/10,net 30 |
1/10, net 30 |
|
Distance |
125 miles |
100 miles |
|
Supplier Quality Rating |
 |  |
|
Supplier Delivery Rating |
 |  |
Truckload (TL >=40,000 lbs.): $0.85 per ton mile
Less than truckload (LTL): $1.10 per ton mile
Note: per ton mile= 2000lbs per mile; number of days per year= 365
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