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The document discusses a manufacturing company considering two quotations from vendors for a new CNC equipment to increase production capacity. Vendor 1 offers a fixed cost of $250,000 with 5% variable cost and $5,000 setup cost from Vietnam. Vendor 2 offers $350,000 fixed cost with 8% variable cost and $2,000 setup cost from Germany. The company must determine the best alternative by evaluating logistics costs from each country to their factory in Melaka and explaining their reasons for the selection.

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27 views

Assignment 1 Question

The document discusses a manufacturing company considering two quotations from vendors for a new CNC equipment to increase production capacity. Vendor 1 offers a fixed cost of $250,000 with 5% variable cost and $5,000 setup cost from Vietnam. Vendor 2 offers $350,000 fixed cost with 8% variable cost and $2,000 setup cost from Germany. The company must determine the best alternative by evaluating logistics costs from each country to their factory in Melaka and explaining their reasons for the selection.

Uploaded by

tehpohkee
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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TRIMESTER#1 (2016-2017)

EME3056 INDUSTRIAL MANAGEMENT


ASSIGNMENT#1

A manufacturing company in Melaka is planning to increase its production capacity by


purchasing a new CNC equipment. However, they have two quotations from 2 different
vendors. Below are the details:

FIXED COST

$250,000

$350,000

VARIABLE COST

5% OF FIXED COST

8% OF FIXED COST

SETUP COST

$5000

$2000

LOGISTICS COST

LC1

LC2

COUNTRY OF ORIGIN

VIETNAM

GERMANY

(a) Describe the possible details for:


(i) FIXED COST

[1mark]

(ii) VARIABLE COST

[2marks]

(iii) SETUP COST

[2marks]

(b) For LOGISTICS COST, propose the method you would use to best predict the cost
estimate for the cost of logistics from the company warehouse in the capital of the countries
to the customer factory at Melaka. Describe clearly your method.
[10marks]

(c) Evaluate and show the best alternative to be chosen. Explain your reasons.

[10marks]

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