A major automobile manufacturer located in Georgetown, Kentucky, has two certified vendors that produce brake pads with the information shown below. New Albany Manufacturing is located in Columbus, Ohio, and LaPlaya Manufacturing is located in Monterrey, Mexico. The automobile assembly factory is assumed to operate 250 days per year. Certified Supplier Order Size (Q) Price per Unit (P) Oversight Cost per Unit (O) Transport Cost per Unit (Ct) Order Cost (Co) Cost to Store One Unit One Year (Ch) Order Lead Time in Days (L) New Albany Mfg. 59,000 $11.74 $0.00 $0.37 $255 $1.70 51 LaPlaya Mfg. 118,000 $11.08 $0.42 $0.87 $290 $1.35 99 Use the Total Supply Chain Cost Excel template to compute the supply chain costs associated with each supplier if the annual demand is 1,180,000 brake pads. Do not round intermediate calculations. Round your answer to the nearest dollar. Order quantity: 59,000 units 118,000 units Total procurement cost: $ $ Total management oversight cost: $ $ Total annual transportation cost: $ $ Annual order cost: $ $ Annual holding cost: $ $ Average annual pipeline invenory cost: $ $ Total supply chain costs: $ $ What supplier and order quantity do you recommend based on total costs? Based on total cost, the company should choose with corresponding order quantity of brake pads.

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

Chapter2: The Purchasing Process

Section: Chapter Questions

Problem 1GPE

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Question

A major automobile manufacturer located in Georgetown, Kentucky, has two certified vendors that produce brake pads with the information shown below. New Albany Manufacturing is located in Columbus, Ohio, and LaPlaya Manufacturing is located in Monterrey, Mexico. The automobile assembly factory is assumed to operate 250 days per year.

Certified Supplier	Order Size (Q)	Price per Unit (P)	Oversight Cost per Unit (O)	Transport Cost per Unit (C_t)	Order Cost (C_o)	Cost to Store One Unit One Year (C_h)	Order Lead Time in Days (L)
New Albany Mfg.	59,000		$11.74	$0.00	$0.37	$255	$1.70	51
LaPlaya Mfg.	118,000		$11.08	$0.42	$0.87	$290	$1.35	99

Use the Total Supply Chain Cost Excel template to compute the supply chain costs associated with each supplier if the annual demand is 1,180,000 brake pads. Do not round intermediate calculations. Round your answer to the nearest dollar.

Order quantity:	59,000 units	118,000 units
Total procurement cost:	$	$
Total management oversight cost:	$	$
Total annual transportation cost:	$	$
Annual order cost:	$	$
Annual holding cost:	$	$
Average annual pipeline invenory cost:	$	$
Total supply chain costs:	$	$

What supplier and order quantity do you recommend based on total costs?

Based on total cost, the company should choose with corresponding order quantity of brake pads.

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