Problem:operational management hw
1. 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 1,000 each. 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 forcast) 12,000 units
Weight per engine 22 pounds
Order processing cost $125 per order
Inventory carry cost 20 percent of the average value of inventory per year
• Assume that half of lot size is in inventory on average (1,000/2= 500 units)
Two qualified suppliers have submitted the following quotations:
Order Quality Sup. 1 Unit $ Sup. 2 Unit $
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1 to 1,499 units/order
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$510.00
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$505.00
|
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1,500 to 2,999 units/order
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500.00
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505.00
|
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3,000+ units/order
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490.00
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488.00
|
|
Tooling costs
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$22,000
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$20,000
|
|
Distance
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125 miles
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100 miles
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Your assistant has obtained the following freight rates from your carrier:
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Truckload (40,000 lbs. each load):
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$0.80 per ton-mile
|
|
Less-than-truckload:
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$1.20 per ton-mile
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• Note: per ton-mile = 2,000 lbs. per mile.
a. Perform a total cost of ownership analysis and select a supplier.
b. Would it make economic sense to order in truckload quantities? Would your supplier selection change if you ordered truckload quantities?
2. U.S. Airfilter has hired you as a supply chain consultant. The company makes air filters for residential heating and air-conditioning systems. These filters are made in a single plant located in Louisville, Kentucky, in the United States. They are distributed to retailers through wholesale centers in 100 locations in the United States, Canada, and Europe.
You have collected the following data relating to the value of inventory in the U.S. Airfilter supply chain
Quarter 1 (jan-mar) Quarter 2 (apr-jun) Quarter 3 ( July- Sept) Quarter 4 ( oct-dec)
|
Sales (total quarter): United States
Canada
Europe
|
300
75
30
|
350
60
33
|
405
75
20
|
375
70
15
|
|
Cost of goods sold (total quarter)
|
280
|
295
|
340
|
350
|
|
Raw materials at the Louisville plant ( end of quarter)
|
50
|
40
|
55
|
60
|
|
Work-in-process and finished goods at the Louisville plant (end-of-quarter)
|
100
|
105
|
120
|
150
|
|
Distribution center inventory (end-of-quarter):
United States
Canada
Europe
|
25
10
5
|
27
11
4
|
23
15
5
|
30
16
5
|
• American dollars
a. What is the average inventory turnover for the fi rm?
b. If you were given the assignment to increase inventory turnover, what would you focus on? Why?
c. The company reported that it used $500M worth of raw material during the year. On average, how many weeks of supply of raw material are on hand at the factory?