A company in Calgary serves a market in the northwestern United States. Now itships LTL at an average cost of $30 per unit. If the company establishes a distributioncenter in the market, it estimates the TL cost will be $15 per unit, inventory carryingcosts will be $7 per unit, and the local LTL cost will average $6 per unit. If the company forecasts annual demand at 200,000 units, how much will they save annually?

A company in Calgary serves a market in the northwestern United States. Now itships LTL at an average cost of $30 per unit. If the company establishes a distributioncenter in the market, it estimates the TL cost will be $15 per unit, inventory carryingcosts will be $7 per unit, and the local LTL cost will average $6 per unit. If the company forecasts annual demand at 200,000 units, how much will they save annually?

Name: A company in Calgary serves a market in the northwestern United States
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Description: A company in Calgary serves a market in the northwestern United States. Now itships LTL at an average cost of $30 per unit. If the company establishes a distributioncenter in the market, it estimates the TL cost will be $15 per unit, inventory carryi

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. Is Ben Gibson acting legally? Is he acting ethically? Why or why not?
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?
A company ships LTL to customers in a market in the Midwest at an average costof $40 per cwt. It proposes establishing a distribution center in this market. TLshipment costs to the DC would be $20 per cwt., the estimated inventory carryingcosts are $5 per cwt., and the local cartage (LTL) cost is estimated at $10 per cwt.If the annual shipped volume is 100,000 cwt., what will the annual savings be byestablishing the distribution center?
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The logistics manager of Hercules, a capital goods manufacturer, is trying to reviewtheir inventory strategy. Hercules has about 50 tier- 1 suppliers. The manager istrying to understand the relationship between ordering cost and inventory carryingcost. Kindly draw out a plan of how this relationship can be used to best advantageof his company.
You are a logistics manager of Medical Device Depot, Inc., located in Ellicott City, MD. Your job is to develop logistics solutions for your international customers. Now you receive an order about one unit of SR-130 Portable X-Ray System Based on the information of company webpage, this equipment has the value of $16,000 and its storage dimension is 26"W x 53" Lx 28"H. This customer is located in Shanghai, China. You may need to google or contact service providers to get quotes. You need to propose two transportation options including transit time and total costs. The two options are: 1) Air shipping: from Ellicott City, MD (BWI airport) to Shanghai, China (SHA airport); 2) Ocean shipping: from Ellicott City, MD (Port of Baltimore) to Shanghai, China (Port of Shanghai).
Great Grab is a leading company in retailing business in Negros Occidental, Philippines. It has 52 stores all over Negros Occidental. 40% of its stores is located in Bacolod City and the remaining stores are in Sagay, Talisay, Isabela and Escalante. Annually, it has an average of 70 million sales. Great Grab is the number one choice since it is cheaper compared to other retailing stores in the province. Over the past five years, the company experienced stock-outs during the holiday season. In order to address the problem, the management implemented a solution – to be able to offer online reservation wherein the customer can do online grocery. As the Operation Manager, Ms. Inah Vidal, puts it, “we will be able to forecast the demand accurately”. Aside from that, they will offer new products such as toys for Christmas. Since TikTok Santas and Christmas wrapper is in demand, the company purchased worth 5 million for both items. During Christmas shopping spree sale for 3 days,…