Concept explainers
Case summary: CEO of company C concerned about the problem that has existed more than 20 years. Even the priors decision did not resolve the problem. One of the decision is to purchase new locomotives and renovate the repair shops bout it is inefficient. Customers experience poor service from company C. Availability of equipment and failure rate between mean time are low compared to other companies. So the company C is considering a new approach to the equipment problem. And the new approach is to lease locomotives from several sources. John vice president estimates that the company would save upto 5 milion annually by this new pproach. The new lease method call for the manufacturers doing the repair work to charge only for maintenance on the actual number of miles that a particular unit operates. The lease agrrement method will last ipto 15 years.
To determine: whether a decision of leasing is best or not.
Want to see the full answer?
Check out a sample textbook solutionChapter 6 Solutions
Transportation: A Global Supply Chain Perspective
- 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?arrow_forwardScenario 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?arrow_forwardYou have been hired as a short-term consultant to evaluate Cop waste's Collection operation in the central business district (CBD) due to a disagreement among cop-waste collection staff members and management. The disagreement revolves around the amount of time spent by collectors on off- route activities. Off route activities will take up 15% of each 8 -hour workday for collectors. However, management claims that the collectors are not adhering to the allocated time, while the collectors claim that they spend less than 15% of their time each day. You are given the following information that has been verified by both collectors and management. A hauled container system -conventional type, The average time spent driving from company to the first container is 20 min The average pic up time per container is 6 min v - The average time required to drive between containers is 6 min - The average time required to empty the container at the disposal site is 6 min V - The average round trip…arrow_forward
- Many students have their lunch and dinner in the Student Canteen in the school For many years, it has been the most-frequented canteen at the university. However, users of the canteen often report dissatisfaction with it. Identify one or more problems, suggest some possible solutions, then decide which of these solutions is the best and support your position. (Apart from the chef problems )!!!!!!arrow_forwardMore often than not, if an organization is not actively seeking improvement, it’s on the way to inevitable decline. Therefore, whether a business is well established or just starting out, there are numerous ways that leadership can seek to enhance business performance. Not only will these practices increase market share, they will also boost return on investment and revenue. With this regard,Explain the role of the following instruments that logistics should implement in order to achieve better performance:1.1 Application of queuing theory 1.2 Route planningarrow_forwardJohn Clooney, a bush pilot in Alaska, makes regular charter flights in his floatplane to various towns and cities in western Alaska. His passengers include hunters, fishermen, backpackers and campers, and tradespeople hired for jobs in the different localities. He also carries some cargo for delivery. The following network shows the possible air routes between various towns and cities John might take (with the times, in hours). For safety reasons, he flies point-to-point, flying over at least one town along a route, even though he might not land there. In the upcoming week John has scheduled charter flights for Kotzebue, Nome, and Stebbins. Determine the shortest route between John’s home base in Anchorage and each of these destinations.arrow_forward
- Describe in your own words assumptions of Maximal Flow Problem by indicating any differences with the assumptions of Transshipment Problem.arrow_forwardZara is a chain of fashion stores owned by Inditex, Spain’s largest apparel manufacturer and retailer. In 2012, Inditex reported sales of about 16 billion euros from more than 6,000 retail outlets in about 86 countries. In an industry in which customer demand is fickle, Zara has grown rapidly with a strategy to be highly responsive to changing trends with affordable prices. Whereas design-to-sales cycle times in the apparel industry have traditionally averaged more than six months, Zara has achieved cycle times of four to six weeks. This speed allows Zara to introduce new designs every week and to change 75 percent of its merchandise display every three to four weeks. Thus, Zara’s products on display match customer preferences much more closely than do those of the competition. The result is that Zara sells most of its products at full price and has about half the markdowns in its stores compared with the competition. Zara manufactures its apparel using a combination of flexible and…arrow_forwardThe City of High Point is buying new school buses for the local school system. High Point has found two models of school buses that it is interested in. Eagle Mover costs $80,000 to buy and uses diesel fuel, with an average fuel efficiency of 10 miles per gallon. Eagle Mover has an operating cost of $.28 per mile. Yellow Transport, a hybrid bus, costs $105,000 to buy and uses diesel fuel and battery power, getting an average of 22 miles per gallon. Yellow Transport has an operating cost of $.32 per mile. The distance traveled annually is determined to be 25,000 miles, with the expected life of either bus to be 10 years. The average diesel price is $3.50 per gallon.arrow_forward
- Purchasing and Supply Chain ManagementOperations ManagementISBN:9781285869681Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. PattersonPublisher:Cengage Learning