Kuantan ATV, Inc. assembles five different models of all-terrain vehicles (ATVs) from various ready-made components to serve the Las Vegas, Nevada, market. The company uses the same engine for all its ATVs. Th purchasing manager, Ms. Jane Kim, needs to choose a supplier for engines for the coming year. Due to the siz of the warehouse and other administrative restrictions, she must order the engines in lot sizes of 1,000 each. TEH unique characteristics of the standardized engine require special tooling to be used during the manufacturing process. Kuantan ATV agrees to reimburse the supplier for the tooling. This is a critical purchase since late delivery of engines would disrupt production and cause 50 percent lost sales and 50 percent book:
Kuantan ATV, Inc. assembles five different models of all-terrain vehicles (ATVs) from various ready-made components to serve the Las Vegas, Nevada, market. The company uses the same engine for all its ATVs. Th purchasing manager, Ms. Jane Kim, needs to choose a supplier for engines for the coming year. Due to the siz of the warehouse and other administrative restrictions, she must order the engines in lot sizes of 1,000 each. TEH unique characteristics of the standardized engine require special tooling to be used during the manufacturing process. Kuantan ATV agrees to reimburse the supplier for the tooling. This is a critical purchase since late delivery of engines would disrupt production and cause 50 percent lost sales and 50 percent book:
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Question
Please answer in excel
![Total
Kuantan ATV, Inc. assembles five different models of all-terrain vehicles (ATVs) from various ready-made
components to serve the Las Vegas, Nevada, market. The company uses the same engine for all its ATVs. The
purchasing manager, Ms. Jane Kim, needs to choose a supplier for engines for the coming year. Due to the size
of the warehouse and other administrative restrictions, she must order the engines in lot sizes of 1,000 each. The
unique characteristics of the standardized engine require special tooling to be used during the manufacturing
process. Kuantan ATV agrees to reimburse the supplier for the tooling. This is a critical purchase since late
delivery of engines would disrupt production and cause 50 percent lost sales and 50 percent back orders of the
ATVS. Jane has obtained quotes from two reliable suppliers but needs to know which supplier is more cost-
effective. The terms of sale are 4/10 net 30 for Supplier 1 and 2/10 net 30 for Supplier 2. The data related to the
costs of ownership associated with two reliable suppliers has been collected in the Microsoft Excel Online file
below. Open the spreadsheet and perform the required analysis to answer the questions below.
Que ons
ssibility: Good to go
1. What is the total cost of ownership for each of the suppliers? Assume the buyer will take advantage of the
largest discount. Do not round intermediate calculations. Round your answers to the nearest cent.
Supplier 1
S fill in the blank 2
2. Which supplier is more cost-effective?
Search
D
L
Supplier 2
S fill in the blank 3
G
Focus
BE](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F045a8244-192b-480f-be1a-1c18909686a5%2F72535e9a-bf1d-4689-976c-9d87901a5335%2Fvk99zcp_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Total
Kuantan ATV, Inc. assembles five different models of all-terrain vehicles (ATVs) from various ready-made
components to serve the Las Vegas, Nevada, market. The company uses the same engine for all its ATVs. The
purchasing manager, Ms. Jane Kim, needs to choose a supplier for engines for the coming year. Due to the size
of the warehouse and other administrative restrictions, she must order the engines in lot sizes of 1,000 each. The
unique characteristics of the standardized engine require special tooling to be used during the manufacturing
process. Kuantan ATV agrees to reimburse the supplier for the tooling. This is a critical purchase since late
delivery of engines would disrupt production and cause 50 percent lost sales and 50 percent back orders of the
ATVS. Jane has obtained quotes from two reliable suppliers but needs to know which supplier is more cost-
effective. The terms of sale are 4/10 net 30 for Supplier 1 and 2/10 net 30 for Supplier 2. The data related to the
costs of ownership associated with two reliable suppliers has been collected in the Microsoft Excel Online file
below. Open the spreadsheet and perform the required analysis to answer the questions below.
Que ons
ssibility: Good to go
1. What is the total cost of ownership for each of the suppliers? Assume the buyer will take advantage of the
largest discount. Do not round intermediate calculations. Round your answers to the nearest cent.
Supplier 1
S fill in the blank 2
2. Which supplier is more cost-effective?
Search
D
L
Supplier 2
S fill in the blank 3
G
Focus
BE
![A
1 Total Cost of Ownership Analysis
2
3 Requirements (annual forecast units)
4
Lot size (Q)
S
Weight per engine (lbs)
Order processing cost (per order)
Inventory carrying rate (per year)
Cost of working capital (per year)
Profit margin
Price of finished ATV
Back-order cost (per unit)
Back-order lost sales
Late delivery lost sales
5
son
800 S.
16
೯ ರ
ogle
rome
20
21
23
24
fx
25
Tosoft 6
dge
Other Information
Truckload (TL=40,000 lbs)
Less-than-truckload (LTL)
Per ton-mile
Days per year
Invoice payment period (days)
Discount period (days)
B
14,000
1,000
24
$165.00
24%
15%
16%
$5,000
$18.00
50%
50%
Sheet1 +
Catculation Mode: Automatic Workbook Statistics
$0.70 per ton-mile
$1.40 per ton-mile
2,000 lbs per mile
365
30
10
D
Items
1 to 999 units per unit
1,000 to 2,999 units per unit
3,000+ units per unit
Tooling cost
Terms (net 30)
Distance (miles)
Supplier Quality Rating (defects)
Supplier Delivery Rating (lateness)
Total engine cost
Cash discount (net 30)
Cash discount (early payment)
Tooling cost
Transportation cost
Ordering cost
Carrying cost
Quality cost
Backorder cost
Lost sales cost
Total cost
Lowest cost
E
Supplier 1
$520.00
$511.00
$501.00
$21,000
4%
140
2%
2%
Supplier 1
$7.280,000.00
SAMSUNG
F
Supplier 2
$530.00
$521.00
$516.00
$25,000
Supplier 2
2%
110
3%
3%
Formu
=B3 E3](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F045a8244-192b-480f-be1a-1c18909686a5%2F72535e9a-bf1d-4689-976c-9d87901a5335%2Fpedvpht_processed.jpeg&w=3840&q=75)
Transcribed Image Text:A
1 Total Cost of Ownership Analysis
2
3 Requirements (annual forecast units)
4
Lot size (Q)
S
Weight per engine (lbs)
Order processing cost (per order)
Inventory carrying rate (per year)
Cost of working capital (per year)
Profit margin
Price of finished ATV
Back-order cost (per unit)
Back-order lost sales
Late delivery lost sales
5
son
800 S.
16
೯ ರ
ogle
rome
20
21
23
24
fx
25
Tosoft 6
dge
Other Information
Truckload (TL=40,000 lbs)
Less-than-truckload (LTL)
Per ton-mile
Days per year
Invoice payment period (days)
Discount period (days)
B
14,000
1,000
24
$165.00
24%
15%
16%
$5,000
$18.00
50%
50%
Sheet1 +
Catculation Mode: Automatic Workbook Statistics
$0.70 per ton-mile
$1.40 per ton-mile
2,000 lbs per mile
365
30
10
D
Items
1 to 999 units per unit
1,000 to 2,999 units per unit
3,000+ units per unit
Tooling cost
Terms (net 30)
Distance (miles)
Supplier Quality Rating (defects)
Supplier Delivery Rating (lateness)
Total engine cost
Cash discount (net 30)
Cash discount (early payment)
Tooling cost
Transportation cost
Ordering cost
Carrying cost
Quality cost
Backorder cost
Lost sales cost
Total cost
Lowest cost
E
Supplier 1
$520.00
$511.00
$501.00
$21,000
4%
140
2%
2%
Supplier 1
$7.280,000.00
SAMSUNG
F
Supplier 2
$530.00
$521.00
$516.00
$25,000
Supplier 2
2%
110
3%
3%
Formu
=B3 E3
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