A
Interpretation: The number of breakers need per year by Equipment Company
Concept Introduction: Decision making is a process of determining the alternative option to a given situation. It reaches the most suitable option for action. During decision making, the factors and some uncertainties are taken to consider.
B
Interpretation: The number of breakers need per year by ESE Company
Concept Introduction: Decision making is a process of determining the alternative option to a given situation. It reaches the most suitable option for action. During decision making, the factors and some uncertainties are taken to consider.
C
Interpretation: The least costly option
Concept Introduction: Decision making is a process of determining the alternative option to a given situation. It reaches the most suitable option for action. During decision making, the factors and some uncertainties are taken to consider.
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Chapter 12 Solutions
MyLab Operations Management with Pearson eText -- Access Card -- for Operations Management: Processes and Supply Chains
- Scenario 3 Ben Gibson, the purchasing manager at Coastal Products, was reviewing purchasing expenditures for packaging materials with Jeff Joyner. Ben was particularly disturbed about the amount spent on corrugated boxes purchased from Southeastern Corrugated. Ben said, I dont like the salesman from that company. He comes around here acting like he owns the place. He loves to tell us about his fancy car, house, and vacations. It seems to me he must be making too much money off of us! Jeff responded that he heard Southeastern Corrugated was going to ask for a price increase to cover the rising costs of raw material paper stock. Jeff further stated that Southeastern would probably ask for more than what was justified simply from rising paper stock costs. After the meeting, Ben decided he had heard enough. After all, he prided himself on being a results-oriented manager. There was no way he was going to allow that salesman to keep taking advantage of Coastal Products. Ben called Jeff and told him it was time to rebid the corrugated contract before Southeastern came in with a price increase request. Who did Jeff know that might be interested in the business? Jeff replied he had several companies in mind to include in the bidding process. These companies would surely come in at a lower price, partly because they used lower-grade boxes that would probably work well enough in Coastal Products process. Jeff also explained that these suppliers were not serious contenders for the business. Their purpose was to create competition with the bids. Ben told Jeff to make sure that Southeastern was well aware that these new suppliers were bidding on the contract. He also said to make sure the suppliers knew that price was going to be the determining factor in this quote, because he considered corrugated boxes to be a standard industry item. Is Ben Gibson acting legally? Is he acting ethically? Why or why not?arrow_forwardScenario 3 Ben Gibson, the purchasing manager at Coastal Products, was reviewing purchasing expenditures for packaging materials with Jeff Joyner. Ben was particularly disturbed about the amount spent on corrugated boxes purchased from Southeastern Corrugated. Ben said, I dont like the salesman from that company. He comes around here acting like he owns the place. He loves to tell us about his fancy car, house, and vacations. It seems to me he must be making too much money off of us! Jeff responded that he heard Southeastern Corrugated was going to ask for a price increase to cover the rising costs of raw material paper stock. Jeff further stated that Southeastern would probably ask for more than what was justified simply from rising paper stock costs. After the meeting, Ben decided he had heard enough. After all, he prided himself on being a results-oriented manager. There was no way he was going to allow that salesman to keep taking advantage of Coastal Products. Ben called Jeff and told him it was time to rebid the corrugated contract before Southeastern came in with a price increase request. Who did Jeff know that might be interested in the business? Jeff replied he had several companies in mind to include in the bidding process. These companies would surely come in at a lower price, partly because they used lower-grade boxes that would probably work well enough in Coastal Products process. Jeff also explained that these suppliers were not serious contenders for the business. Their purpose was to create competition with the bids. Ben told Jeff to make sure that Southeastern was well aware that these new suppliers were bidding on the contract. He also said to make sure the suppliers knew that price was going to be the determining factor in this quote, because he considered corrugated boxes to be a standard industry item. As the Marketing Manager for Southeastern Corrugated, what would you do upon receiving the request for quotation from Coastal Products?arrow_forwardDescribe the value chain of Harley Davidson company, with particular focus on the promised activities that they undertake to bring their product/service to market.arrow_forward
- Donegal Footwear is an international supplier of outdoor footwear for adventurous families. Currently, the company uses a logistical provider to provide warehouse services and handle packages destined for ground delivery. The contract calls for $9 million in annual fixed charges, which covers the provider’s overhead and warehouse costs, and variable costsof $15 per package shipped. Recently, Donegal Footwear found a warehouse it could lease at a cost of $16 million per year, which includes lease costs, labor, and management oversight. Furthermore, the company found another provider who would deliver packages from the warehouse for $6.00 per package. Considering only costs, how many packages must Donegal Footwear ship to make the vertical integration into warehouse operations beneficial?arrow_forwardUnioil produces vegetable based cooking oil and butter spreads. Unioil uses large quantities of crude palm oil (CPO)in its production process as a main raw material. It is April 2021 now and Unioil estimates a need of 25,000 metric tons (MTs)of CPO in September 2021. Current spot price of CPO is RM2200 per MT. You as the procurement manager of Unioil, have the following alternatives to hedge the possible increase in the CPO price by September 2021: a) The analysist predicts that the CPO will be trading at RM3400 per MT in September 2021. b) Forward contracts on CPO for September 2021 delivery is available at RM3600 per MT. C) September 2021 Futures contract on CPO (FCPO) is available and currently trading at RM2280 per MT. (FCPO has a contract specification of 25 metric tons per contract). What would be your net purchase price in September 2021 if the CPO closing price in September 2021 is RM3500 per MT? Justify whether this is a perfect hedge? d) European Options on September…arrow_forwardRayyan manufacturing company is trying to decide whether to make-or-buy an accessory item for one of their products. It is projected that this item will sell for $14 each. If the item is outsourced, there is virtually no cost other than the $10 per unit that they would pay their supplier. Internally, they have a choice of making a process to produce the item which requires an investment of $300,000 for design and equipment, but results in a $9 per unit cost. Regardless of whether the item is outsourced or produced internally, there is a 60% chance that they will sell 250,000 units, and a 40% chance that they will sell 150,000 units.arrow_forward
- Q2 answer in 1.30 hourarrow_forwardOne of the key aspects of PT Logistra's operations is the selection of the right suppliers to ensure the availability of raw materials and necessary goods. The company is considering expanding its supplier network to guarantee the continuous supply of essential materials and products. Careful supplier selection is crucial to meet PT Logistra's quality standards and operational efficiency. The company has defined several criteria for supplier selection, including price and quality. Three potential suppliers (A, B, and C) have been identified.Price Analysis (in thousands of dollar) Supplier Product X Product Y Product Z A 100 110 120 B 95 105 115 C 110 115 125 Product Quality Analysis (scale 1-10) Supplier Product X Product Y Product Z A 8 9 7 B 9 8 8 C 7 6 8 Determine: a.Total Cost for each supplier b.In your opinion, how is the Activity-Based Costing (ABC) approach used to measure logistics costs at PT Logistra?c. Implications of increasing supply chain…arrow_forwardA software company is considering outsourcing one of its software products to India for maintenance and support services. The annual costs in the U.S. and India are as follows: It will cost $90,000 o train the personnel in India to take over the maintenance and support service that can be amortized over two years. The product will require management and supervision from the U.S. at $40,000 per year and it costs $5,000 per year to administer the contract. a. What are the total costs of outsourcing this service compared to the U.S. costs? b. What risks are associated with outsourcing this service? c. Should the product be outsourced to India?arrow_forward
- Rao Technologies, a California-based high-techmanufacturer, is considering outsourcing some of its electron-ics production. Four firms have responded to its request forbids, and CEO Mohan Rao has started to perform an analy-sis on the scores his OM team has entered in the table below. Weights are on a scale from 1 through 30, and the outsourc-ing provider scores are on a scale of 1 through 5. The weightfor the labor factor is shown as a w because Rao’s OM teamcannot agree on a value for this weight. For what range ofvalues of w, if any, is company C a recommended outsourcingprovider, according to the factor-rating method?arrow_forwardConsider the following scenario for Ryan's Unique DooDad Integrated Supply Chain: a multi-tiered supply chain consisting of a Wholesaler (W), a Retailer (R), and a Manufacturer (M). The Wholesaler supplies a product to a Retailer (R), which, in turn, sells the product to end Customers (C). C pays R $9.50 per unit. R pays W $6.00 per unit. W pays the Manufacturer (M) $2.90 per unit. The costs to M are $1.40/unit. Note THE ANSWER IS % 95.29 PLEASE EXPLAIN IN DETAIL Use the Newsvendor Model to determine answer The optimal service level for the integrated supply chain is 51.72% 97.59% 42.17% 48.52% 77.76% 95.29%arrow_forwardAt the BlueFin Bank corporate headquarters, management was discussing the potential of outsourcing the processing of credit card transactions to DataEase, an international provider of banking operational services. Processing of the transactions at BlueFin has been a costly element of the annual profit and loss statement and the continual investment in equipment to keep up to date has been draining capital reserves. Based upon initial study and negotiations, DataEase will charge $0.02 more per transaction than BlueFin's cost per transaction, and DataEase will want $7 million per year to cover equipment and overhead costs associated with the contract. BlueFin has yet to develop an estimate for the annual overhead and fixed costs associated with processing the transactions. These costs include supervision, administrative support, maintenance, equipment depreciation, and overhead. If BlueFin must process 23 million transactions per year, how high must those fixed costs be before it would…arrow_forward
- Purchasing and Supply Chain ManagementOperations ManagementISBN:9781285869681Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. PattersonPublisher:Cengage Learning