MGT301, Spring 2016 Assignment 4 - 25

Question 1

Your company makes snow blowers and this winter they have been selling very well.  You are evaluating a quote from a supplier for engines that power your snow blowers.  The quote is as follows:

Supplier 1

Price

$90

Terms

2% 10 Net 45

Distance

200

Order quantity

1500

Weight

20 lbs

Tooling

$25000

Quality Failures

3%

Assume the following:

Annual volume for engines is expected to be 90,000 units

Inventory holding rate is 25%

Cost to place an order is $100

Working capital costs are 12%

Your freight rate is $1.75 per ton mile for a full truckload (40,000 lbs) and $2.00 for a less-than-truckload shipment

There are 365 days in a year.

Late-delivery costs should be ignored.

What is the total cost of ownership for supplier 1?  (Show your work.)

Question 2

A company using a weighted-criteria evaluation system has established these 3 categories for supplier evaluation and the appropriate weight are in parentheses: Quality(0.50), Technology(0.20), Cost(0.30). 

The scores for each category for Company A are: Quality(90), Technology(75), Cost(60)

The scores for each category for Company B are: Quality(80), Technology(95), Cost(90)

The scores for each category for Company C are: Quality(90), Technology(80), Cost(95)

Calculate the weight score for each supplier? Which supplier would you consider your top supplier? Based on our discussion in class, what category would you place the suppliers? (Show your work.)