Submitted by: Submitted by jthomps732
Views: 1377
Words: 563
Pages: 3
Category: Business and Industry
Date Submitted: 04/25/2012 04:37 PM
Joshua Thompson
Procurement
Case: The Global Sourcing Wire Harness Decision
April 9, 2012
1.
Original Wire quote:
• Unit price = $30
• Packing costs = $.75 per unit
• Tooling = $6,000 one time fixed charge
• Freight cost = $5.20 per hundred pounds
The per unit cost (based on an annual supply)
Yearly Unit Cost=
(annual demand *( unit cost + packaging cost )) + tooling charge
( 60000 *( 30 + .75 )) + 6000
(60,000 * 30.75+6,000=$1,851,000
Unit Cost = $1,851,000/6,000= 30.85
Yearly Freight Cost =
#units * unit weight * freight cost
60000*10 *.0520 = $31,200
Unit Freight Cost = 31200/60000 = .52
Total Unit Cost = Unit cost + Freight Cost
30.85 + .52 = $31.87
2.
HLA Quote:
• Unit price = $19.50
• Shipping lead time = 8 weeks
• Tooling = $3,000
The per unit cost (based on an annual supply)
Yearly Unit Cost=
(annual demand *( unit cost + packaging cost )) + Tooling charge
(60000 *(19.50 + 0.00)) + 3000 = $1,173,000
Total Unit Cost = 1173000/60000 = $19.55
Monthly Freight Cost = $41,366
Unit Freight Cost = 41,366/5000 = 8.28
Total Unit Cost = Unit cost + Freight Cost
19.55 + 8.28 = $27.83
3.
Sheila should recommend Happy Lucky Assemblies because it has a cheaper per unit cost than Original Wire.
4.
There is a need to warehouse at least four weeks of inventory in Detroit at a warehousing cost of $1.00 per cubic ft per month. The costs associated with committing corporate capital for holding inventory must also be calculated. Corporate cost of capital rate of 15 %. The cost of hedging currency – broker fees = $ 400 per shipment. Additional administrative time due to international shipping = 4hrs per shipment x $25 hr. Elements such as quality and technology need to be assessed as well. If one supplier clearly has better quality, than this may affect the total cost of ownership associated with using a given supplier. If a supplier is also...