Please write a clear answer and explanation Klein Chemicals, Inc., produces a special oil-based material that is currently in short supply. Four of Klein's customers have already placed orders that together exceed the combined capacity of Klein's two plants. Klein's management faces the problem of deciding how many units it should supply to each customer. Because the four customers are indifferent industries, different prices can be charged because of the various industry pricing structures. However, slightly different production costs at the two plants and varying transportation costs between the plants and customers make a "sell to the highest bidder" strategy unacceptable. After considering price, production costs, and transportationcosts, Klein established the following profit per unit for each plant-customer alternative.PlantClifton SpringsDanvillePlantClifton SpringsDanville42D₁Danville-D₁Danville-D₂Danville-D3Danville-D4Total Cost$321Clifton Springs-D₁ 2000Clifton Springs-D₂Clifton Springs-D3Clifton Springs-D4The plant capacities and customer orders are as follows.34$34 $30Capacity (units)D₂5,0003,000CustomerUnitsDistributor 2 will have a shortfall ofDistributor 3 will have a shortfall ofDistributor 4 will have a shortfall of$34 $32 $40(b) Which customer demands will not be met?Distributor 1 will have a shortfall ofD3X$28(a) How many units should each plant produce for each customer to maximize profits?Optimal Solution$2$$ 64,000$136000$$4D4$$$38$Costunits.units.units.Distributor Orders (units)units.D₁D₂D3D42,000X5,0003,0002,000

(a) How many units should each plant produce for each customer to maximize profits? Optimal Solution Clifton Springs-D₁ 2000 Clifton Springs-D₂4 Clifton Springs-D₂ Clifton Springs-D₂ Danville-D₁ Danville-D₂ Danville-D₂ Danville-D Total Cost Units x x (b) Which customer demands will not be met? Distributor 1 will have a shortfall of Distributor 2 will have a shortfall of Distributor 3 will have a shortfall of Cost 64,000 136000 units. units. units. x

(a) How many units should each plant produce for each customer to maximize profits? Optimal Solution Clifton Springs-D₁ 2000 Clifton Springs-D₂4 Clifton Springs-D₂ Clifton Springs-D₂ Danville-D₁ Danville-D₂ Danville-D₂ Danville-D Total Cost Units x x (b) Which customer demands will not be met? Distributor 1 will have a shortfall of Distributor 2 will have a shortfall of Distributor 3 will have a shortfall of Cost 64,000 136000 units. units. units. x

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

ChapterC: Cases

Section: Chapter Questions

Problem 5.1SC: Scenario 3 Ben Gibson, the purchasing manager at Coastal Products, was reviewing purchasing...

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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. As the Marketing Manager for Southeastern Corrugated, what would you do upon receiving the request for quotation from Coastal Products?
Acme Inc. has decided to outsource and offshore a small electric motor that it currently manufactures itself. It has found an offshore supplier that charges $925,000 for a minimum order quantity of 5,000 motors. Shipping costs for this quantity are $15,000. The buyer expects to place four orders per year to meet its annual need for 20,000 motors. Annual carrying cost is 25% of unit price, and import tariffs are 12% of unit price. The company expects to spend $12,500 per year on contracting and relationship maintenance.What is the total cost of outsourcing and offshoring this motor?
gohotels.ph, a property of Robinson's Land, began test marketing its value hotel in May 2010 at its building along Edsa beside Robinson's Pioneer Street. It has about 200 rooms in the Edsa site but has chosen to have 60 to 100 rooms in each of their subsequent sites in the provincial areas. Its pricing is unique because it utilizes the revenue management model of the airline industry where prices would Ivary depending on demand, in this case, occupancy numbers. Thus, a 16 to 22 square meter room can command a price as low as P388 plus value added tax (VAT), or as high as P3,000 plus VAT, averaging about P1,550 plus VAT per room per night booked via internet. While the prices are low, the room boasts of a comfortable bed with two types of pillows (hypoallergenic and chiropractic), a clean private bathroom with rain shower, free wifi, LCD TV, convenient location with safe surroundings secured by CCTV and safety cabinet. On its first month of its test market and despite using mostly…
A company's distribution and warehouse expenses do NOT include which one of the following? a) The costs of processing, boxing, packaging, handling, and shipping orders to footwear retailers and -online buyers b)A standard import tariff of $4.00 per pair on any pairs imported from the company's foreign production facilities--tariffs are due and payable at the port of entry rather than when the pairs are sold c)Annual leasing and maintenance fees of $1 million for each of the company's four distribution centers; however, such expenses fall to 5 times the number of pairs sold when warehouse volume in any region is less than 200,000 pairs annually (should company managers decide to abandon selling footwear in a geographic region, leasing and maintenance costs will fall to $0 (resuming if/when sales begin again) d)The inventory costs of carrying unsold pairs over from the prior year ($0.50 per pair on required inventrory and $1 per pair on additional unsold pairs) e)Per pair freight…
) O'Donnell & Joyce purchases components from three suppliers. Components purchased from Supplier A are priced at €7 each and used at the rate of 18,000 units per month. Components purchased from Supplier B are priced at €5 each and are used at the rate of 4,500 units per month. Components purchased from Supplier C are priced at €9 each and used at the rate of 1000 units per month. Currently, O'Donnell & Joyce purchases a separate truckload from each supplier. As part of its JIT drive, O'Donnell & Joyce has decided to aggregate purchases from the three suppliers. The trucking company charges a fixed cost of €550 for the truck with an additional charge of €120 for each stop. Thus, if O'Donnell & Joyce asks for a pickup from only one supplier, it charges €670; from two suppliers, it charges €790; and from three suppliers, it charges €910. What replenishment strategy would you suggest for O'Donnell & Joyce to minimize annual costs? Assume an annual holding cost of 25…
The village board of Park City, Utah, arranges for the clearing of all snow in city streets. Weekly snowfall during the winter is normally distributed with a mean of 10 inches and a standard deviation of 4 inches. The board is considering a long term contract with a snow removal company. The long- term contract costs $1000 per truck per week. Thus, if the board signs a long-term contract for 12 inches, they pay $12,000 per week whether the trucks are used or not. Each truck is capable of clearing 1 inch of snow per week. If snowfall in a week exceeds the quantity that can be handled by the trucks included in the long term lease, the board must make emergency arrangements at a cost of $2,500 for each additional truck brought in. For how many trucks should the board sign a long term contract?
1. Superior Wire, Inc. produces and sells special types of wire used in a variety of telecommunication applications. The firm's initial growth came from sales of a new wire that was used by cellular telephone service companies when setting up transmission stations. However, growth in that market has slowed. Moreover, at present, most of the other products offered by the firm are similar to those available from a variety of other suppliers. Angelina Stowe, the marketing manager for the company, recently scheduled a meeting with the company president to discuss problems of falling profits. Stowe expressed concern that the company did not have a specific person responsible for identifying new products. The president pointed out that few other firms in their industry had such a position and generally argued that new product thinking was the responsibility of everyone in the firm. After further discussion, the president agreed to let Stowe send out a memo to all company employees…
ABC Corporation has determined that his cologne is selling at 300 per bottle with a fixed cost of Php 2,000 and a variable cost of Php100 per unit., EFG has decided to order 40 bottles of the cologne. Will you decide to produce the products based on the number of orders or will you decline the order? Why? Given the situation of ABC Corporation, suppose EFG has decided to order 5 bottles only, would you decide to produce the products? Why? What is the break even point of ABC Corporation before they can decide to produce the units? *
Chris Sandvig Irigation, Inc., has summarized the price list from four potential suppliers of an underground control valve. See the table below. Annual usage is 700 valves; order cost is $7 per order, and annual inventory holding costs are $2.15 per unit. Vendor A Quantity 1-14 Vendor B Price $34.75 Vendor C Price $34.50 Vendor D Price $34.25 33.00 31.00 Quantity Quantity 1-149 Price Quantity $35.00 1-24 1-49 50-149 150-299 15-24 34.75 25-99 100-199 34.00 33.75 32.50 150-299 25-99 100-199 200-399 33.55 32.35 32.80 300+ 31.60 30.50 200-399 300+ 31.10 31.15 400+ 400+ 30.75 Which vendor should be selected and what order quantity is best if Sandvig Irrigation wants to minimize total cost? Chris Sandvig Irigation should order units at a time from Vendor B(enter your response as a whole number).
2) Using the cost table of the transportation problem shown below, do the following: a) Develop the appropriate LP model of the problem. WAREHOUSE PLANT A B C D DEMAND 1 5 10 7 20 200 2 3 12 5 25 400 3 8 10 10 18 600 4 7 8 12 30 1000 SUPPLY 200 500 300 1000
Determine how many products to ship from each factory to each warehouse, or from each factory to each warehouse and direct to each end customer, to minimize shipping cost while meeting warehouse demands and not exceeding factory supplies Explain the above scenario using the problem given below: Warehouse Capucity Factory w, W, W. (Supply) 21 16 25 13 F. F, 17 18 14 23 13 32 27 18 41 19 Requirement 6 (Demand) 10 12 15 43 Use least cost Method to solve the problem. Using Transportation method
Community Hospital orders latex sanitary gloves from a hospital supply firm. The hospital expects to use 40,000 pairs of gloves per year. The cost to order and to have the gloves delivered is $180. The annual carrying cost is $0.18 per pair of gloves. The hospital supply firm offers the following quantity discount pricing schedule: Quantity Price 0–9,999 $0.34 10,000–19,999 0.32 20,000–29,999 0.30 30,000–39,999 0.28 40,000–49,999 0.26 50,000+ 0.24 Determine the optimal order size for the hospital.