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Compute the projected profit for the order quantities suggested by the management team under three scenarios: worst case in which sales = 10,000 units, most likely case in which sales = 20,000 units, and best case in which sales = 30,000 units.

10. If 12,500 units are produced, what is the total amount of fixed manufacturing cost incurred to support this level of production?

Q.1) Compute the following quantities for the current production process as well as for Mike’s and Ike’s plans, assuming the plans are implemented as described in the case.

Question 4: Take into account the answer to question 1 and the supplier’s new policy outlined in question 2 and the warehouse’s new policy in question 3. Then determine Low’s new EOQ.

14. A decision to work closely with a limited number of suppliers for the purpose of ensuring that the proper materials are available at the optimal time is an example of:

Solely taking a look at the graph, to accommodate future demand for growth I would recommend ocean transportation to move our products from the new facility in China. As we expect demand to grow by 10 percent annually over the next five years, it will be most beneficial to utilize ocean transportation as projected total costs for air becomes higher than ocean above the trade off point of 1,904,761.9 POUNDS. For example, total projected costs were calculated to be at $587,156 for air versus $630,080 for ocean at the end of 5 years. Extrapolate the graph even further into the future, with the expectation of even more growth,

Alistair Wu has requested that I look at what the lowest shipping schedule and cost can be based on data that he has provided. He wants to know what the lowest possible cost of shipping will can be. Mr. Wu is also considering increasing production at the Shanghai factory from 1,300 to 2,800 units, and wants to ensure that this growth will be an affordable choice. The first chart that was given lists the factory capacity and what each warehouse demand is. The second chart lists the price of shipping from each factory to each warehouse. The chart looks at the demand in the warehouses as well as the cost to

5. Proposed location of the new warehouse and transportation distances from the new location to each retail outlet/customer

Initially, the trucks were only loaded with 150 drums, which did not maximize the truck’s capacity. The initial set up of 150 drums were shipped by truck at a cost of $100/drum ($15,000/150). However, if each truck leaves the factory full, each drum will only cost $75 ($15,000/200) to ship opposed to mailing each drum individually for $150. We wanted two full trucks shipping 400 drums to the warehouse.

production and sales of Product A is 2,000 units and of Product B is 3,000 units. There are three activity cost

Production in factories is carried out in batches, where each batch is an integer number of drums set by you. The cost to produce one batch equals $1500 plus the number of drums in the batch times $1000. For example, the cost to produce a batch of 10 drums is $1500 + (10)$1000 = $11,500.

7. Though numbers given in the cost data can not be contested, I would definitely contest the way total cost has been computed. The item 345 department operates within a large manufacturing facility that churns out number of other products too. Hence judging the profitability of item 345 on the basis of total cost is not practical.

As in part one of the Supply Chain Game, we were given the option to use trucks as a shipping method. This method can make or break your bottom line because it is an expensive option if you are not utilizing it properly. The cost of using this shipping method is still $15,000 whether the truck is in full or partial methods. The importance of running this part of the operation to perfection is in the numbers. A truck that leaves at half capacity (100 drums) is only generating $145,000 on that run, whereas a full truck would yield

Since 2008, Bergerac had been exploring the opportunity to begin its own production of cartridge components. Plastic suppliers like GenieTech and Elsinore faced difficulties in responding to demand spikes, leading to production delays. Such supplier unreliability made it challenging for Bergerac to optimize its cartridge production. Thus, the company had to carry more inventory of parts and finished goods than Wyckoff could have liked. The obvious appeal to fully control the supply of plastic lead to a strategy, the company has to decide whether to buy or build this capability. GenieTech owner was interested in retirement and was willing to sell the company for a purchase price of $5.75 million. GenieTech has 8 molding presses each could produce 5 cartridges per cycle with a total capacity of 10,782,720 cartridges per year with 5 days production in a week. The other alternative is to build a unit with 4 molding presses which are more efficient than the presses at GenieTech. The total capacity of the unit will be 6,097,371cartridges per year with 5 days production in a week. It is required to predict the best long term decision among the buy and build options.

Under the original costing system used by Dakota Office Products, Customer A is shown to be slightly less profitable than Customer B. From the calculations above, we see that Customer A is slightly profitable at 0.3% profit as a percent of sales, and Customer B is not profitable, at a loss of (7.1%). We observe that Customer A is a consumer of low-cost services and generally pay their bills within 30 days unlike customer B who took 90 days or more. Timely servicing of debt led to profitability of Customer A.