Durant Co. manufactures glass bottles for dairy products. The contribution margin is $0.10 perbottle. Durant just received notification that one of its orders for 100,000 bottles contained misprintedlabels and thus had to recall and reprint the bottle labels. If it will cost $0.05 per bottle to reprint thelabels and $1,000 to reship the bottles, what will the net contribution margin be after the recall?

Durant Co. manufactures glass bottles for dairy products. The contribution margin is $0.10 perbottle. Durant just received notification that one of its orders for 100,000 bottles contained misprintedlabels and thus had to recall and reprint the bottle labels. If it will cost $0.05 per bottle to reprint thelabels and $1,000 to reship the bottles, what will the net contribution margin be after the recall?

Name: Durant Co. manufactures glass bottles for dairy products. The contribu
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Description: Durant Co. manufactures glass bottles for dairy products. The contribution margin is $0.10 perbottle. Durant just received notification that one of its orders for 100,000 bottles contained misprintedlabels and thus had to recall and reprint the bottl

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?
Belletricity Inc., a medium electronic circuit board manufacturer in the US, is a long-term supplier to Morden Equipment (ME). ME is Belletricity’s only client. Every year, Belletricity sells around 5 million circuit boards to ME, which occupies Belletricity’s full production capacity. In 2012, ME informed Belletricity that due to business expansion, ME would increase the purchase from 5 million to 15 million starting from 2013. Belletricity has been selling circuit boards at the unit rate of USD 0.8 to ME so far. Due to the future increase of the buying volume, ME therefore asked Belletricity a price cut to USD 0.6 each. After negotiation, ME agreed to buy from Belletricity at the price of USD 1.00 starting 2013, for three years consecutively, till 2015. a) What was the rationale behind that ME agreed to pay a higher price to buy from Belletricity for the next three years? b) Why could Belletricity successfully persuade ME to accept her requested price?
Whole Nature Foods sells a gluten-free product for which theannual demand is 5,000 boxes. At the moment, it is paying $6.40 for each box; carrying cost is 25% of the unit cost; order-ing costs are $25. A new supplier has offered to sell the same item for $6.00 if Whole Nature Foods buys at least 3,000 boxesper order. Should the firm stick with the old supplier, or takeadvantage of the new quantity discount?
Classification of Costs The following is a list of costs from the accounting records of SunshinePool Management Inc. Each of Sunshine’s 77 customers is a swim club. Sunshine maintains eachcustomer’s pool by providing lifeguards, supplies, cleaning, and repairs.1. Lifesaving supplies2. Salaries of Sunshine’s managers3. Pool chemicals4. Sunshine’s office rental expense5. Wages of lifeguards6. Workers’ compensation insurance7. Training for lifeguards8. pH testing supplies9. Office expense, including bookkeeping and clerical10. Depreciation on cleaning and testing equipmentRequired Classify each item as direct or indirect assuming that the cost objects are each of the77 swim clubs.
You are the manager of a retail store that sells home theater systems among other products. The weekly demand for these systems is 600. The warehouse you rent to store the inventory of home security systems charges you $8 per month for holding each unit of inventory. You buy these systems from a very reliable supplier for $250 per piece and sell each for $500 per piece. Each time you place an order to buy the systems from your supplier, you pay $416 as a fixed fee per order regardless of the quantity. Once the order is placed, the supplier takes exactly 1 week to deliver the order regardless of the quantity ordered. Please use this information to answer the following questions: a) What is the optimal order quantity (i.e. Economic Order Quantity OR EOQ - i.e. what quantity should be ordered per order) that would minimize the total annual ordering and holding costs? b) What is the ideal reorder level assuming no safety stock (i.e. the inventory level at which you should place the…
You are the manager of a retail store that sells home theater systems among other products. The weekly demand for these systems is 600. The warehouse you rent to store the inventory of home security systems charges you $8 per month for holding each unit of inventory. You buy these systems from a very reliable supplier for $250 per piece and sell each for $500 per piece. Each time you place an order to buy the systems from your supplier, you pay $416 as a fixed fee per order regardless of the quantity. Once the order is placed, the supplier takes exactly 1 week to deliver the order regardless of the quantity ordered. Please use this information to answer the following questions: a) What is the optimal order quantity (i.e. Economic Order Quantity OR EOQ - i.e. what quantity should be ordered per order) that would minimize the total annual ordering and holding costs? b) What is the ideal reorder level assuming no safety stock (i.e. the inventory level at which you should place the…
Item X is a standard item stocked in a company’s inventory of spare parts. Each year, the firm uses about 2,000 units of Item X, which costs Php 1,000 per unit. Storage costs, which include insurance and cost of capital, amount to 18 percent of item unit cost. Placing an order for more of Item X costs Php 400. The company operates 360 days per year and Item X is received 9 days after placement of order. How much would be Item X's total annual procurement cost? * Php 16,971 Php 2,000,000 None of the above Php 8,485 How much would be Item X's total annual storage cost? * Php 8,485 Php 16,971 Php 2,000,000 None of the above How much would be Item X's total annual stockout cost? * Php 16,971 Zero None of the above Php 8,485
Item X is a standard item stocked in a company’s inventory of spare parts. Each year, the firm uses about 2,000 units of Item X, which costs Php 1,000 per unit. Storage costs, which include insurance and cost of capital, amount to 18 percent of item unit cost. Placing an order for more of Item X costs Php 400. The company operates 360 days per year and Item X is received 9 days after placement of order. How much would be Item X's total annual procurement cost? A. None of the above B. Php 8,485 C. Php 16,971 D. Php 2,000,000
Your new company has decided to use a periodic reviewsystem. You have learned that average weekly demand is 48units per week with a standard deviation of 8 units. You believethat your cycle-service level should be 94 percent. Lead timeis two weeks. Initially, you believe that you should do a reviewevery Friday. Determine the required safety stock and the targetinventory level.(a) How would this procedure change if the cycle-servicelevel needed to be 98 percent?(b) What is the impact of changing the review period fromevery Friday to every other Friday, assuming that thecycle-service level is 94 percent?
A supplier has come to you and offered the following deal. If you buy 29 or fewer cases of cleaning solution, the cost will be $25 for each case. If you buy 30 or more cases, the cost will be $20 per case. Assume your cost of carrying inventory is 15 percent a year, it costs $20 for you to order the material, and you use 50 cases per year.a. How many cases should you order?b. Would you negotiate with this supplier for a further discount? Explain the quantities and prices that you would negotiate for and why those quantities and prices are selected.
Waldo sells pre-packaged lunches to construction workers at a Peachtree Street construction site near the Georgia Tech campus. The pre-packed lunches include hand crafted sandwiches (made by Waldo's significant other), chips, and a piece of fruit. In total, product costs for Waldo are $3.50/lunch and he sells the product for $10.00 to his construction worker clientele. Ignore sales tax, Waldo doesn’t pay it anyway. When Waldo runs out of product, he simply takes orders from his remaining customers, walks two blocks to the Varsity Drive In, and buys the exact amount of product needed to fill the orders. Waldo charges each customer exactly $2.00 more per product than his costs, which will be variable based on the exact food orders placed by the individual workers. Waldo only provides this "courier" service if he runs out of his own product and performs the service to maintain goodwill with his customers. If instead of being under, Waldo is over on product, he sells his unsold lunches to…