What is the total annual inventory carrying cost

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Reference no: EM133672532

Assignment: A Total Cost Approach to Understanding Supply Chain Risk

Question I: Using the exchange rates cited in the case, what is the INITIAL PURCHASE COST PER UNIT (in US Dollars; do not include transportation costs) paid to: i. Dong Hai Supply in Chengdu, China? ii. CousinsAg in Wahoo, Nebraska? iii. Staberhofer Supply in Freising, Germany?

Question II: What is the AVERAGE TIME for an order filling a TEU container to come from: i. Dong Hai Supply in Chengdu, China to IDC's AllianceTexas Distribution Center? ii. CousinsAg in Wahoo, Nebraska to IDC's AllianceTexas® Distribution Center? iii. Staberhofer Supply in Freising, Germany to IDC's AllianceTexas Distribution Center?

Question III: Using the exchange rates cited in the case, what is the COST (in US Dollars including tariffs and duties) to ship a TEU container from: i. Dong Hai Supply in Chengdu, China to IDC's AllianceTexas Distribution Center? ii. Staberhofer Supply in Freising, Germany to IDC's AllianceTexas Distribution Center?

Question IV: What is the ECONOMIC ORDER QUANTITY (use unit price only; do not include transportation costs when you calculate economic order quantity) if we purchase everything from: This document is available from our site and provided for your personal use only and may not be retransmitted or redistribute d without written permission from the Council of Supply Chain Management Professionals (CSCMP). You may not upload any of this site's material to any public server, online service, network, or bulletin board without written permission from CSCMP. A Total Cost Approach to Understanding Supply Chain Risk 8 i. Dong Hai Supply in Chengdu, China? ii. CousinsAg in Wahoo, Nebraska? iii. Staberhofer Supply in Freising, Germany?

Question V: How many units of SAFETY STOCK will we need to hold if we purchase everything from: i. Dong Hai Supply in Chengdu, China? ii. CousinsAg in Wahoo, Nebraska? iii. Staberhofer Supply in Freising, Germany?

Question VI: Inventory Carrying Costs are based on the value of the product at the time it is held in inventory. What is the IN-TRANSIT CARRYING COST PER UNIT (in dollars and cents) if we purchase everything from: i. Dong Hai Supply in Chengdu, China? ii. CousinsAg in Wahoo, Nebraska? iii. Staberhofer Supply in Freising, Germany?

Question VII: What AVERAGE INVENTORY LEVEL (in units; be sure to consider both safety stock and cycle stock) will we hold at the IDC's AllianceTexas Distribution Center if we purchase everything from: i. Dong Hai Supply in Chengdu, China? ii. CousinsAg in Wahoo, Nebraska? iii. Staberhofer Supply in Freising, Germany?

Question VIII: Inventory Carrying Costs are based on the value of the product at the time it is held in inventory. When the product is sitting in the IDC AllianceTexas Distribution Center, its value is a combination of purchase price PLUS any transportation costs to get it from the supplier to the DC PLUS in-transit carrying This document is available from our site and provided for your personal use only and may not be retransmitted or redistribute d without written permission from the Council of Supply Chain Management Professionals (CSCMP). You may not upload any of this site's material to any public server, online service, network, or bulletin board without written permission from CSCMP. A Total Cost Approach to Understanding Supply Chain Risk 9 costs. What is the TOTAL ANNUAL INVENTORY CARRYING COST (in dollars) for the safety stock and cycle stock inventory held at the AllianceTexas Distribution Center if we purchase everything from: i. Dong Hai Supply in Chengdu, China? ii. CousinsAg in Wahoo, Nebraska? iii. Staberhofer Supply in Freising, Germany?

Question IX: Inventory Carrying Costs are based on the value of the product at the time it is held in inventory. When the product is sitting at IDC's AllianceTexas Distribution Center, its value is a combination of purchase price PLUS any transportation costs to get it from the supplier to the DC plus in-transit carrying costs. ON A PER-UNIT BASIS (in dollars) what is the TOTAL ANNUAL INVENTORY CARRYING COST for the safety stock and cycle stock inventory held at IDC's AllianceTexas Distribution Center if we purchase everything from: i. Dong Hai Supply in Chengdu, China? ii. CousinsAg in Wahoo, Nebraska? iii. Staberhofer Supply in Freising, Germany?

Question X: Let's put it all together to determine the total cost of ownership. We have determined the unit price, the in-transit carrying cost, the transportation costs, and the IDC AllianceTexas Distribution Center's inventory carrying cost. If we also consider the Annual Ordering Cost, what is the TOTAL LANDED COST OF OWNERSHIP PER UNIT (in dollars) if we purchase everything from: i. Dong Hai Supply in Chengdu, China? ii. CousinsAg in Wahoo, Nebraska? iii. Staberhofer Supply in Freising, Germany? This document is available from our site and provided for your personal use only and may not be retransmitted or redistribute d without written permission from the Council of Supply Chain Management Professionals (CSCMP). You may not upload any of this site's material to any public server, online service, network, or bulletin board without written permission from CSCMP. A Total Cost Approach to Understanding Supply Chain Risk 10

Question XI: If we change our strategy to "near-sourcing," ANNUALLY WHAT IS THE ADDITIONAL COST OF NEAR-SOURCING?

Question XII: After we make our initial sourcing decision based on the lowest total (landed) cost, we get hit with unexpected supply chain disruption which clogs the port of Long Beach and delays shipments adding 89 days to receive a shipment from our Chengdu supplier as cargo ships "drift" in San Pedro Bay waiting to unload. If we shift from ocean shipping to air, flying from Shanghai to DFW, we can bypass the port congestion, but at a much higher cost. Doing so will speed the shipment to 1 day loading in Shanghai, 2 days air shipping, and 1 day to clear customers at AFW and deliver from the Alliance airfield to our warehouse; but at a cost 17 times that of ocean shipping for the same volume of freight. 1. How does this change your sourcing decision in terms of: i. Dong Hai Supply in Chengdu, China? ii. CousinsAg in Wahoo, Nebraska? iii. Staberhofer Supply in Freising, Germany? 2. AT WHAT ADDITIONAL COST?

Question XIII: After considering the new information contained in XII, based on LOWEST TOTAL LANDED COST should we "near-source" or should we shift to air for shipments from Chengdu supplier? WHAT IS THE LOWEST TOTAL LANDED COST?

Reference no: EM133672532

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