Please answer within 30 minutes as my assignment is timed! Also Round correctly
ID: 376521 • Letter: P
Question
Please answer within 30 minutes as my assignment is timed! Also Round correctly as to not get a thumbs down.
Nottingham Equipment sells high-end food processing equipment and systems to food processing plants. They are seeking bids for a powerful electric motor which will be used in one of their new products. Their forecasts show they will need 750 units per month. They have two supplier options: one domestic and one foreign. The table below summarizes the costs for these two options. Note that the administrative fee is a monthly flat fee, not a per-unit fee.
Criteria
Domestic
Foreign
Price/Unit
$24.63
$22.21
Packaging Cost/Unit
$0.89
$1.25
International Shipping/Unit
$0
$1.15
Freight Forwarder Fee/Unit
$0
$0.02
U.S. Port Handling/Unit
$0
$0.35
Inland Freight/Unit
$1.34
$1.49
Flatt Fee Admin Cost/Month (not per unit)
$25
$100
a.What is the total landed cost (per month) for the domestic supplier? (Display your answer as a whole number.)
b.What is the total landed cost (per month) for the foreign supplier? (Display your answer as a whole number.)
c.Suppose actual demand is only 75% of expected demand. What would be the total landed cost of the domestic supplier? (Display your answer as a whole number.)
d.At what volume of demand would the total cost be the same for the domestic supplier and the foreign supplier? (Display your answer as a whole number.)
Criteria
Domestic
Foreign
Price/Unit
$24.63
$22.21
Packaging Cost/Unit
$0.89
$1.25
International Shipping/Unit
$0
$1.15
Freight Forwarder Fee/Unit
$0
$0.02
U.S. Port Handling/Unit
$0
$0.35
Inland Freight/Unit
$1.34
$1.49
Flatt Fee Admin Cost/Month (not per unit)
$25
$100
Explanation / Answer
Answer to Q.a :
Total landed cost per month for the domestic supplier
= 750 x ( 24.63 + 0.89 + 1.34) + 25
= 750 x 26.86 + 25
= 20145 + 25
= 20170
TOTAL LANDED COST PER MONTH FOR DOMESTIC SUPPLER = $20170
Answer to Q.b:
Total landed cost for foreign supplier
= 750 x ( 22.21 + 1.25 + 1.15 + 0.02 + 0.35 + 1.49 ) + 100
= 750 x 26.47 + 100
= 19852.5 + 100
= 19952.5
TOTAL LANDED COST FOR FOREIGN SUPPLIER = $19952
Answer to Q.C
Actual demand = 75 % of expected demand = 0.75 x 750 = 562.5
Total landed cost per month for the domestic supplier
= 562.5 x ( 24.63 + 0.89 + 1.34) + 25
= 562.5 x 26.86 + 25
= 15108.75 + 25
= 15183.75 ( 15184 ROUNDED TO NEAREST WHOLE NUMBER )
TOTAL LANDED COST PER MONTH FOR DOMESTIC SUPPLER = $15184
Answer to Q.D:
Let the required monthly volume at which total cost for domestic supplier and foreign supplier is same = N
Therefore ( taking cue from answers under #a and #b:
26.86.N + 25 = 26.47.N + 100
Or, 0.39.N = 75
Or, N = 75/0.39 = 192.30 ( 192 ROUNDED TO NEAREST WHOLE NUMBER )
THE REQUIRED VOLUME = 192
TOTAL LANDED COST PER MONTH FOR DOMESTIC SUPPLER = $20170