Study Mo

Nama Kelompok :

1. Namira Noviar

2. Tania Safira

3. Rio Darmawan

Case Problem 10.1

Beating the Bad Weather

1.Overview Case

ABC Ulsan Oil Field Equipment Manufaturers is competing with Daejon Suppliers to provide process control computers to Sino-Russian gas pipeline under construction. Due to the remoteness of the pipeline consturction, severe weather condition, and short consturction season, the construction firm must have the highest level of assurance that their suppliers can meet delivery dates. The firm is looking at the option of buying larger quantitites of materials and storing them on site, or obtaining smaller shipments on a more frequent basis. The firm has been trying to determine the best quatitantive method of comparing either purchasing larger or smaller material lots. The purchasing agent has sugested that they compare each options’s inventory turns and days of supply as part of decision making.

These are following table that contains the result of this second data set

| Supplier 1 | Supplier 2 | Construction Firm |

COGS | 4500000 | 3500000 | 7500000 |

Raw Material | 375000 | 295000 | 0 |

Work-in Process | 25000 | 30000 | 150000 |

Finished Goods | 750000 | 700000 | 145000 |

Weeks work | 52 | 52 | 52 |

Days per Week | 5 | 6 | 7 |

2. Case Analysis

Days of Supply have more meaning in the wholesale and retail portions of service sector than in manufacturing. It is computed below as the reciprocal of inventory turnover :

Days of supply = Inventory Investment/(Annual cost of goods sold/ (52week*day per week) )

Inventory Turnover is computed on an annual basis. Using Equation :

Inventroy Turnover = Cost of Goods Sold/ Inventory Investment

First, we have to know the Inventory Investment of each alternative. Inventory Investment can be calculated by sum of raw material, WIP, and finished goods.

| Supplier 1 | Supplier 2 | Construction Firm |

Raw Material | 375000 | 295000 | 0 |

Work-in Process | 25000 |...