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    Pan Y Canela RD
    The document calculates costs and quantities for two suppliers, Cousins AG and Dong Hai Supply. It determines that Dong Hai Supply has a lower total cost of ownership per unit, at $105.969 compared to $112.453 for Cousins AG. Additional risks of water transport and currency fluctuations are noted for Dong Hai Supply. Reducing transportation time could help lower total landed costs.

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    Case Answers

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    Pan Y Canela RD
    603 views3 pages
    The document calculates costs and quantities for two suppliers, Cousins AG and Dong Hai Supply. It determines that Dong Hai Supply has a lower total cost of ownership per unit, at $105.969 compared to $112.453 for Cousins AG. Additional risks of water transport and currency fluctuations are noted for Dong Hai Supply. Reducing transportation time could help lower total landed costs.

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    The document calculates costs and quantities for two suppliers, Cousins AG and Dong Hai Supply. It determines that Dong Hai Supply has a lower total cost of ownership per unit, at $105.969 compared to $112.453 for Cousins AG. Additional risks of water transport and currency fluctuations are noted for Dong Hai Supply. Reducing transportation time could help lower total landed costs.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    603 views3 pages

    Case Answers

    Uploaded by

    Pan Y Canela RD
    The document calculates costs and quantities for two suppliers, Cousins AG and Dong Hai Supply. It determines that Dong Hai Supply has a lower total cost of ownership per unit, at $105.969 compared to $112.453 for Cousins AG. Additional risks of water transport and currency fluctuations are noted for Dong Hai Supply. Reducing transportation time could help lower total landed costs.

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    © All Rights Reserved
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    Download as docx, pdf, or txt
    You are on page 1of 3

    1) Initial purchase cost per unit = Per unit price* exchange rate = 547*0.

    14646 =

    $80.11362 answer

    2) Average time for an order filling a TEU container to come from Dong Hai Supply in

    Chengdu, China to IDCs Alliance Fort Worth Distribution Center – (1+4+16+3+4) =

    28

    Average = {(28+3.45)+(28-3.45)}/2 = 28 days answer

    Average time for an order filling a TEU container to come from CousinsAG in

    Wahoo, Nebraska to IDCs Alliance Fort Worth Distribution Center – (10+5) = 28

    Average = {(15+1.14)+(15-1.14)}/2 = 15 days answer

    3) Cost to ship TEU container from Dong Hai Supply in Chengdu, China to IDCs

    Alliance Fort Worth Distribution Center = (12414.5*0.14646 + 325 + 2250) =

    $4393.23 answer

    4) Economic order quantity from Cousins AG = square root of

    2*21500*$105/(32.2%*85)

    EOQ = 407 units answer

    Economic order quantity from Dong Hai Supply = square root of

    2*21500*$182/(32.2%*80.11362)

    EOQ = 551 units answer

    5) Safety stock = 97.7%*21500/365*15 = 868 units for CousinsAg and

    97.7%*21500/365*28 = 1619 units for Dong Hai Supply

    6) In transit carrying costs for Cousins AG = 32.2%*$85*15/365 = $1.125 per unit

    answer.

    In transit carrying costs for Cousins AG = 32.2%*$80.11362*28/365 = $1.979 per

    unit.
    7) Average inventory level for both CousinsAg will be 22368 units or Dong Hai Supply

    will be 23119 units

    8) Total annual inventory carrying costs for CousinsAG=

    32.2%*{(22368*85)+(22368/407*105)} = $614070 answer

    Total annual inventory carrying costs for Dong Hai Supply =

    32.2%*{(23119*80.11362)+(23119/551*182)} = $597763 answer

    9) Per unit carrying costs for Cousins AG = 614070/22368 = $27.453 per unit answer

    Per unit carrying costs for Dong Hai Supply = 597763/23119 = $25.856 per unit

    answer

    10) Total cost of ownership per unit for Cousins AG = 85+27.453 = $112.453 answer

    Total cost of ownership per unit for Dong Hai Supply = 80.11362 +25.856 =

    $105.969 answer

    11) Least total cost supplier of Schachtel Schmuggel Bannware is Dong Hai Supply

    12) Two additional risks are as follows:

    a) Risk of water transport

    b) Risk of currency fluctuations

    Two realistic quantitative measure for each risk are as follows:

    a) Risk of water transport – Probability of water loss

    b) Risk of currency fluctuations – Standard deviation of exchange rates

    13) Improvements in the supply chain to reduce total landed cost can only be achieved

    with reduction in transportation time

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