CORe Exam Dumps | A manufacturing company purchases a certain component in quantities of 10,000 units per truckload. The

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Question 5/151

A manufacturing company purchases a certain component in quantities of 10,000 units per truckload. The company uses 2,000,000 units annually. The firm's supply manager identifies two possible suppliers of the component, both of which meet service and quality requirements.
Supplier A offers the component at $.69 per unit and charges $2000 to ship one truckload. Supplier B offers the component at $.71 per unit and charges $1500 to ship one truckload. Given this situation, which of the following will be MOST useful to the supply manager in deciding between the two suppliers?

A. Landed price

B. Value analysis

C. Economic order quantity

D. Cost/price analysis

Correct Answer: A

* Calculate Total Cost per Supplier: This includes the unit price and shipping costs.
* Supplier A: Unit cost is $0.69. Shipping cost is $2000 per 10,000 units.
* Total cost per unit: $0.69 + ($2000/10,000) = $0.69 + $0.20 = $0.71 per unit.
* Supplier B: Unit cost is $0.71. Shipping cost is $1500 per 10,000 units.
* Total cost per unit: $0.71 + ($1500/10,000) = $0.71 + $0.15 = $0.715 per unit.
* Compare Landed Prices: The total cost per unit for Supplier A is $0.71, and for Supplier B, it is
$0.715.
* Decision: Supplier A offers the lower landed price at $0.71 per unit compared to Supplier B's $0.715 per unit.
References
* Monczka, R. M., Handfield, R. B., Giunipero, L. C., & Patterson, J. L. (2016). Purchasing and Supply Chain Management. Cengage Learning.
* Christopher, M. (2016). Logistics & Supply Chain Management. Pearson.

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