Compton Electronics manufactures laptops for major computer manufacturers. A key element of the laptop is the keyboard. Compton has identified three potential suppliers for the keyboard, each located in a different part of the world. Important cost considerations are the price per keyboard, freight costs, inventory costs, and contract administrative costs. The annual requirements for the keyboard are 300,000 units. Assume Compton has 250 business days a year. Managers have acquired the following data for each supplier. Annual Freight Costs Supplier Shipping Quantity (Units/Shipment) 10,000 20,000 30,000 Belfast Hong Kong Shreveport $380,000 $615,000 $285,000 $260,000 $547,000 $240,000 $237,000 $470,000 $200,000 Keyboard Costs and Shipping Lead Times Supplier Price/Unit Annual InventoryCarrying Cost/Unit ShippingLead Time (Days) AdministrativeCosts Belfast Hong Kong Shreveport $100 $96 $99 $20.00 $19.20 $19.80 15 25 5 $180,000 $300,000 $150,000 Which supplier provides the lowest annual total cost to Compton?
Compton Electronics manufactures laptops for major computer manufacturers. A key element of the laptop is the keyboard. Compton has identified three potential suppliers for the keyboard, each located in a different part of the world. Important cost considerations are the price per keyboard, freight costs, inventory costs, and contract administrative costs. The annual requirements for the keyboard are 300,000 units. Assume Compton has 250 business days a year. Managers have acquired the following data for each supplier. Annual Freight Costs Supplier Shipping Quantity (Units/Shipment) 10,000 20,000 30,000 Belfast Hong Kong Shreveport $380,000 $615,000 $285,000 $260,000 $547,000 $240,000 $237,000 $470,000 $200,000 Keyboard Costs and Shipping Lead Times Supplier Price/Unit Annual InventoryCarrying Cost/Unit ShippingLead Time (Days) AdministrativeCosts Belfast Hong Kong Shreveport $100 $96 $99 $20.00 $19.20 $19.80 15 25 5 $180,000 $300,000 $150,000 Which supplier provides the lowest annual total cost to Compton?
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 1.7A: Avion, Inc. Susan Dey and Bill Mifflin, procurement managers at Avion, Inc., sat across from each...
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Compton Electronics manufactures laptops for major computer manufacturers. A key element of the laptop is the keyboard. Compton has identified three potential suppliers for the keyboard, each located in a different part of the world. Important cost considerations are the price per keyboard, freight costs, inventory costs, and contract administrative costs. The annual requirements for the keyboard are 300,000 units. Assume Compton has 250 business days a year. Managers have acquired the following data for each supplier.
| Annual Freight Costs | |||
| Supplier | Shipping Quantity (Units/Shipment) | ||
| 10,000 | 20,000 | 30,000 | |
|
Belfast Hong Kong Shreveport |
$380,000 $615,000 $285,000 |
$260,000 $547,000 $240,000 |
$237,000 $470,000 $200,000 |
| Keyboard Costs and Shipping Lead Times | ||||
| Supplier | Price/Unit | Annual Inventory Carrying Cost/Unit |
Shipping Lead Time (Days) |
Administrative Costs |
|
Belfast Hong Kong Shreveport |
$100 $96 $99 |
$20.00 $19.20 $19.80 |
15 25 5 |
$180,000 $300,000 $150,000 |
Which supplier provides the lowest annual total cost to Compton?
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