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Your company assembles five different models of a motor scooter that is sold in specialty stores in the United States. The company uses the same engine for all five models. You have been given the assignment of choosing a suppiler for these engines for the coming year. Due to the size of your warehouse and other administrative restrictions, you must order the engines in lot sizes of 1,300 units. Because of the unique characteristics of the engine, special tooling is needed during the manufacturing process for which you agree to reimburse the supplier. Your assistant has obtained quotes from two reliable engine suppliers and you need to decide which to use. The following data have been collected: Requirements (annual forecast) Weight per engine Order processing cost Inventory carry cost Note: Assume that half of lot size is in inventory on average (1.300/2-650 units). Two qualified suppliers have submitted the following quotations: ORDER QUANTITY 1 to 1,499 units/order 1,500 to 2,999 units/order 3,000 units/order Tooling costs Distance 15,000 units 15 pounds $ 200 per order 20 percent of the average value of inventory per year SUPPLIER 1 UNIT PRICE $636 Total cost 631 $23,700 120 miles SUPPLIER 2 UNIT PRICE $634 634 $21,700 100 miles Your assistant has obtained the following freight rates from your carrier: Truckload (41,000 lbs. each load): Less-than-truckload: 50.00 per ton-mile $1.20 per ton-mile Note: Perton-mile = 2,000 lbs.per mile. a-1. Calculate the total cost for each supplier. (Round your answers to the nearest whole number.) Supplier 1 Supplier 2

Your company assembles five different models of a motor scooter that is sold in specialty stores in the United States. The company uses the same engine for all five models. You have been given the assignment of choosing a suppiler for these engines for the coming year. Due to the size of your warehouse and other administrative restrictions, you must order the engines in lot sizes of 1,300 units. Because of the unique characteristics of the engine, special tooling is needed during the manufacturing process for which you agree to reimburse the supplier. Your assistant has obtained quotes from two reliable engine suppliers and you need to decide which to use. The following data have been collected: Requirements (annual forecast) Weight per engine Order processing cost Inventory carry cost Note: Assume that half of lot size is in inventory on average (1.300/2-650 units). Two qualified suppliers have submitted the following quotations: ORDER QUANTITY 1 to 1,499 units/order 1,500 to 2,999 units/order 3,000 units/order Tooling costs Distance 15,000 units 15 pounds $ 200 per order 20 percent of the average value of inventory per year SUPPLIER 1 UNIT PRICE $636 Total cost 631 $23,700 120 miles SUPPLIER 2 UNIT PRICE $634 634 $21,700 100 miles Your assistant has obtained the following freight rates from your carrier: Truckload (41,000 lbs. each load): Less-than-truckload: 50.00 per ton-mile $1.20 per ton-mile Note: Perton-mile = 2,000 lbs.per mile. a-1. Calculate the total cost for each supplier. (Round your answers to the nearest whole number.) Supplier 1 Supplier 2

Practical Management Science
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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Can you assit me with Chapter 16 Problem 8. I do not understand the process. Thank you 

**Motor Scooter Engine Supplier Selection** **Overview:** Your company assembles five different models of motor scooters sold in specialty stores across the United States, using the same engine for all models. You are tasked with selecting a supplier for these engines for the upcoming year, which requires a total of 15,000 units due to warehouse and order limitations. **Collected Data:** 1. **Requirements:** - **Annual Forecast:** 15,000 units - **Weight:** 15 pounds - **Order Processing Cost:** $120 per order - **Inventory Carry Cost:** 20% of the average inventory value per year 2. **Inventory Note:** - Half of the order size remains in inventory on average (650 units for 1,300 units per order). 3. **Supplier Quotations:** - **Supplier 1:** - Unit Price: $625 - Order Quantities: - 1,300 units at $625/unit - 4,000 units at $613/unit - Tooling Costs: $23,000 - Estimated Transportation Distance: 120 miles - **Supplier 2:** - Unit Price: $618 - Order Quantities: - 1,300 units at $618/unit - 5,000 units at $612/unit - Tooling Costs: $7,000 - Estimated Transportation Distance: 150 miles 4. **Freight Rates:** - Truckload (TL, 41,000 lbs. each load): $0.80 per ton-mile - Less-Than-Truckload (LTL): $1.20 per ton-mile **Calculation Parameters:** - 1 ton (mile) = 2,000 lbs. per mile **Tasks:** - **Calculate Total Cost for Each Supplier:** - Round answers to the nearest whole number. **Cost Analysis:** - Calculate the respective costs for both suppliers to determine which offers the most cost-effective solution for engine supply. Consider order processing, freight, tooling, and carrying costs in your calculations.
Transcribed Image Text:**Motor Scooter Engine Supplier Selection** **Overview:** Your company assembles five different models of motor scooters sold in specialty stores across the United States, using the same engine for all models. You are tasked with selecting a supplier for these engines for the upcoming year, which requires a total of 15,000 units due to warehouse and order limitations. **Collected Data:** 1. **Requirements:** - **Annual Forecast:** 15,000 units - **Weight:** 15 pounds - **Order Processing Cost:** $120 per order - **Inventory Carry Cost:** 20% of the average inventory value per year 2. **Inventory Note:** - Half of the order size remains in inventory on average (650 units for 1,300 units per order). 3. **Supplier Quotations:** - **Supplier 1:** - Unit Price: $625 - Order Quantities: - 1,300 units at $625/unit - 4,000 units at $613/unit - Tooling Costs: $23,000 - Estimated Transportation Distance: 120 miles - **Supplier 2:** - Unit Price: $618 - Order Quantities: - 1,300 units at $618/unit - 5,000 units at $612/unit - Tooling Costs: $7,000 - Estimated Transportation Distance: 150 miles 4. **Freight Rates:** - Truckload (TL, 41,000 lbs. each load): $0.80 per ton-mile - Less-Than-Truckload (LTL): $1.20 per ton-mile **Calculation Parameters:** - 1 ton (mile) = 2,000 lbs. per mile **Tasks:** - **Calculate Total Cost for Each Supplier:** - Round answers to the nearest whole number. **Cost Analysis:** - Calculate the respective costs for both suppliers to determine which offers the most cost-effective solution for engine supply. Consider order processing, freight, tooling, and carrying costs in your calculations.
**b-1.** If you could move the lot size up to ship in truckload quantities, calculate the total cost for each supplier. *(Do not round intermediate calculations. Round "Required lot size for truckload" and final answers to the nearest whole number.)* **HINT:** Use full truckload cost rates and the lowest (feasible) unit cost for all calculations. For example, if there are 8.3 orders per year, don’t split the 8.3 orders into 8 full truckloads and 0.3 less-than-truckloads - use the full truckload rate for all 8.3 orders. For annual purchase cost, don’t use two different unit costs for the 8 complete orders and the 0.3 partial orders – use the lowest (feasible) unit cost for all 8.3 purchase orders based on the lot size needed for a full truckload. | | Supplier 1 | Supplier 2 | |------------------|------------|------------| | **Total cost** | | | **b-2.** Would your supplier selection change? - Yes - No
Transcribed Image Text:**b-1.** If you could move the lot size up to ship in truckload quantities, calculate the total cost for each supplier. *(Do not round intermediate calculations. Round "Required lot size for truckload" and final answers to the nearest whole number.)* **HINT:** Use full truckload cost rates and the lowest (feasible) unit cost for all calculations. For example, if there are 8.3 orders per year, don’t split the 8.3 orders into 8 full truckloads and 0.3 less-than-truckloads - use the full truckload rate for all 8.3 orders. For annual purchase cost, don’t use two different unit costs for the 8 complete orders and the 0.3 partial orders – use the lowest (feasible) unit cost for all 8.3 purchase orders based on the lot size needed for a full truckload. | | Supplier 1 | Supplier 2 | |------------------|------------|------------| | **Total cost** | | | **b-2.** Would your supplier selection change? - Yes - No
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