A company will begin stocking remote control devices. Expected monthly demand is 800 units. The controllers can be purchased from either supplier A or supplier B. Their price lists are as follows: SUPPLIER A Quantity 1-199 200-499 500+ Unit Price $14.00 13.80 13.60 SUPPLIER B Quantity 1 - 149 150-349 350 + Unit Price $14.10 13.90 13.70 Ordering cost is $40 and annual holding cost is 25 percent of unit price per unit. Which supplier should be used and what order quantity is optimal if the intent is to minimize total annual costs?

A company will begin stocking remote control devices. Expected monthly demand is 800 units. The controllers can be purchased from either supplier A or supplier B. Their price lists are as follows: SUPPLIER A Quantity 1-199 200-499 500+ Unit Price $14.00 13.80 13.60 SUPPLIER B Quantity 1 - 149 150-349 350 + Unit Price $14.10 13.90 13.70 Ordering cost is $40 and annual holding cost is 25 percent of unit price per unit. Which supplier should be used and what order quantity is optimal if the intent is to minimize total annual costs?

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

ChapterC: Cases

Section: Chapter Questions

Problem 5.1SC: Scenario 3 Ben Gibson, the purchasing manager at Coastal Products, was reviewing purchasing...

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Scenario 3 Ben Gibson, the purchasing manager at Coastal Products, was reviewing purchasing expenditures for packaging materials with Jeff Joyner. Ben was particularly disturbed about the amount spent on corrugated boxes purchased from Southeastern Corrugated. Ben said, I dont like the salesman from that company. He comes around here acting like he owns the place. He loves to tell us about his fancy car, house, and vacations. It seems to me he must be making too much money off of us! Jeff responded that he heard Southeastern Corrugated was going to ask for a price increase to cover the rising costs of raw material paper stock. Jeff further stated that Southeastern would probably ask for more than what was justified simply from rising paper stock costs. After the meeting, Ben decided he had heard enough. After all, he prided himself on being a results-oriented manager. There was no way he was going to allow that salesman to keep taking advantage of Coastal Products. Ben called Jeff and told him it was time to rebid the corrugated contract before Southeastern came in with a price increase request. Who did Jeff know that might be interested in the business? Jeff replied he had several companies in mind to include in the bidding process. These companies would surely come in at a lower price, partly because they used lower-grade boxes that would probably work well enough in Coastal Products process. Jeff also explained that these suppliers were not serious contenders for the business. Their purpose was to create competition with the bids. Ben told Jeff to make sure that Southeastern was well aware that these new suppliers were bidding on the contract. He also said to make sure the suppliers knew that price was going to be the determining factor in this quote, because he considered corrugated boxes to be a standard industry item. As the Marketing Manager for Southeastern Corrugated, what would you do upon receiving the request for quotation from Coastal Products?
Inventory Management You are the store manager at a local branch of DigiLife, a large electronics retail chain. A new version of a popular consumer electronics device called the Amulet is coming out this year. It is your job to sell as many Amulets as you can while minimizing your costs in order to maximize your store's profits. Your Goal Earn $1,000,000 in net profits of Amulet sales.
Demand for portable music players for joggers has caused Nancy Industries (Nancy) to grow almost 50 percent over the past year. The number of joggers continues to expand, so Nancy expects demand for music player to also expand, because, as yet, no safety laws have been passed to prevent joggers from wearing them. Demands for the players for last year was as follows : Month Demand (units) Jan 4200 Feb 4300 Mar 4000 Apr 4400 May 5000 Jun 4700 Jul 5300 Aug 4900 Sep 5400 Oct 5700 Nov 6300 Dec 6000 Question : From the choice of simple moving average, weighted moving average, exponential smoothing, and linear regression analysis, which forecasting technique would you consider the most accurate to Nancy Industries? Why?
Neverland Company, a retailer, plans to sell 15,000 units of Product X during the month of August. If the company has 2,500 units on hand at the start of the month, and plans to have 2,000 units on hand at the end of the month, how many units of Product X must be purchased from the supplier during the month? * 17,000 15,000 14,500 15,500
Bradley Solutions and Alexander Limited are two well-established suppliers of inexpensive tools. Weekend Projects is a national chain of retail outlets that caters to the occasional fixer-upper who would prefer to get the job done fast rather than investing in a well-appointed tool box. Weekend Projects wants to find a supplier for a particular tool set that promises to be a big seller. Expected annual sales are 100,000 units (D). Weekend's warehouses operate 50 weeks a year. Management collected data on the two suppliers, which are contained in the table below: Annual Freight Costs Shipping Quantity (Q) Price/Unit Annual Holding Lead Time (L) (p) $7.15 $7,15 Annual Supplier Bradley Alexander 10,000 25,000 $40.000 $26.000 50,000 $18.000 Cost/Unit (H) (wks) Administrative Cost $15.000 $1.43 $1.43 $30,000 $25,000 $17,000 6 $10,000 a. Which of the two suppliers would provide the lowest annual cost to Weekend Projects? What shipping quantity would you suggest? Using V and a shipping…
Bradley Solutions and Alexander Limited are two well-established suppliers of inexpensive tools. Weekend Projects is a national chain of retail outlets that caters to the occasional fixer-upper who would prefer to get the job done fast rather than investing in a well-appointed tool box. Weekend Projects wants to find a supplier for a particular tool set that promises to be a big seller. Expected annual sales are 100,000 units (D). Weekend's warehouses operate 50 weeks a year. Management collected data on the two suppliers, which are contained in the table below: Annual Freight Costs Shipping Quantity (Q) Price/Unit Annual Holding Lead Time (L) Cost/Unit (H) $1.43 Annual Supplier Bradley Alexander Administrative Cost $15,000 $10.000 10.000 25,000 50,000 (p) $7. 15 (wks) $40,000 $30,000 $26,000 $18.000 $25,000 $17,000 $7,15 $1.43 6 a. Which of the two suppliers would provide the lowest annual cost to Weekend Projects? What shipping quantity would you suggest? Using Alexander and a…
Bradley Solutions and Alexander Limited are two well-established suppliers of inexpensive tools. Weekend Projects is a national chain of retail outlets that caters to the occasional fixer-upper who would prefer to get the job done fast rather than investing in a well-appointed tool box. Weekend Projects wants to find a supplier for a particular tool set that promises to be a big seller. Expected annual sales are 100,000 units (D). Weekend's warehouses operate 50 weeks a year. Management collected data on the two suppliers, which are contained in the table below: Annual Freight Costs Shipping Quantity (Q) Price/Unit Annual Holding Lead Time (L) Annual Supplier Bradley Alexander 50.000 $18,000 $17.000 Cost/Unit (H) $1.43 $1.43 10,000 25,000 (p) $7.15 (wks) Administrative Cost $40,000 $30,000 $26.000 $25.000 $15,000 S7.15 6 $10.000 a. Which of the two suppliers would provide the lowest annual cost to Weekend Projects? What shipping quantity would you suggest? Using and a shipping quantity…
Bradley Solutions and Alexander Limited are two well-established suppliers of inexpensive tools. Weekend Projects is a national chain of retail outlets that caters to the occasional fixer-upper who would prefer to get the job done fast rather than investing in a well-appointed tool box. Weekend Projects wants to find a supplier for a particular tool set that promises to be a big seller. Expected annual sales are 100,000 units (D). Weekend's warehouses operate 50 weeks a year. Management collected data on the two suppliers, which are contained in the table below: Annual Freight Costs Shipping Quantity (Q) Price/Unit Annual Holding Lead Time (L) Cost/Unit (H) Annual Supplier Bradley Alexander 10,000 $35,000 25,000 $27,000 $40,000 $28,000 $18,000 50,000 $17,000 (p) (wks) Administrative Cost $8.10 $8.10 $1.62 $1.62 $15,000 $10,000 6 a. Which of the two suppliers would provide the lowest annual cost to Weekend Projects? What shipping quantity would you suggest? Using V and a shipping…
Bradley Solutions and Alexander Limited are two well-established suppliers of inexpensive tools. Weekend Projects is a national chain of retail outlets that caters to the occasional fixer-upper who would prefer to get the job done fast rather than investing in a well-appointed tool box. Weekend Projects wants to find a supplier for a particular tool set that promises to be a big seller. Expected annual sales are 100,000 units (D). Weekend's warehouses operate 50 weeks a year. Management collected data on the two suppliers, which are contained in the table below: Annual Freight Costs Shipping Quantity (Q) Price/Unit Annual Holding Lead Time (L) Cost/Unit (H) $1.43 $1.43 Annual Supplier Bradley 10,000 $40,000 50,000 $18,000 $25,000 $17,000 25,000 (p) S7.15 (wks) Administrative Cost $26.000 5 $15,000 Alexander $30,000 S7.15 $10.000 a. Which of the two suppliers would provide the lowest annual cost to Weekend Projects? What shipping quantity would you suggest? Using Alexander and a…
Bradley Solutions and Alexander Limited are two well-established suppliers of inexpensive tools. Weekend Projects is a national chain of retail outlets that caters to the occasional fixer-upper who would prefer to get the job done fast rather than investing in a well-appointed tool box. Weekend Projects wants to find a supplier for a particular tool set that promises to be a big seller. Expected annual sales are 100,000 units (D). Weekend's warehouses operate 50 weeks a year. Management collected data on the two suppliers, which are contained in the table below: Annual Freight Costs Shipping Quantity (Q) Annual Price/Unit Annual Holding Lead Time (L) Cost/Unit (H) $1.83 $1.83 50,000 Supplier Bradley Alexander 10,000 25,000 $28.000 (wks) (p) $9.15 $9.15 Administrative Cost $40,000 $35,000 $18,000 $17,000 $10,000 $15,000 $26,000 7 a. Which of the two suppliers would provide the lowest annual cost to Weekend Projects? What shipping quantity would you suggest? Using and a shipping quantity…
Bradley Solutions and Alexander Limited are two well-established suppliers of inexpensive tools. Weekend Projects is a national chain of retail outlets that caters to the occasional fixer-upper who would prefer to get the job done fast rather than investing in a well-appointed tool box. Weekend Projects wants to find a supplier for a particular tool set that promises to be a big seller. Expected annual sales are 100,000 units (D). Weekend's warehouses operate 50 weeks a year. Management collected data on the two suppliers, which are contained in the table below: Annual Price/Unit Holding Cost/Unit Lead Time (L) (p) (wks) Supplier 10,000 25,000 50,000 Bradley $40,000 $26,000 $19,000 Alexander $30,000 $28,000 $17,000 $7.15 $7.15 a. Which of the two suppliers would provide the lowest annual cost to Weekend Projects? What shipping quantity would you suggest? and a shipping quantity of Using Annual Freight Costs Shipping Quantity (Q) -w an example Get more help. (H) $1.43 $1.43 6 4 Annual…
Demand for stereo headphones and music players for joggers has caused Nina Industries to grow almost 50 percent over the past year. The number of joggers continues to expand, so Nina expects demand for headsets to also expand, because, as yet, no safety laws have been passed to prevent joggers from wearing them. Demand for the players for this year was as follows: MONTH DEMAND (UNITS) January 4,150 February 4,250 March 3,950 April 4,350 May 4,950 June 4,650 July 5,250 August 4,850 September 5,350 October 5,650 November 6,250 December 5,950 a. Using linear regression analysis, what would you estimate demand to be for each month next year? Using a spreadsheet, follow the general format in Exhibit 3.8. (Do not round intermediate calculations. Round your answers to 2 decimal places.) b. To be reasonably confident of meeting demand, Nina decides to use 3 standard errors of estimate for safety. How many additional units should be held to meet this…