Which supplier should alphacap choose

Assignment Help Supply Chain Management
Reference no: EM13859016

Alphacap, a manufacturer of electronic components, is trying to select a single supplier for the raw materials that go into their main product, the doublecap, a new capacitor that is used by cellular phone manufacturers to protect microprocessors from power spikes. Two companies can provide the necessary materials-MultiChem and Mixemat. MultiChem has a very solid reputation for its products and charges a higher price due to their reliability of supply and delivery.

MultiChem dedicates plant capacity to each customer and therefore supply is assured. This allows MultiChem to charge $1.20 for the raw materials used in each double cap. Mixemat is a small raw materials supplier that has limited capacity.

They charge only $.90 for a unit's worth of raw materials but their reliability of supply is in question. They do not have enough capacity to supply all their customers all the time. This means that orders to Mixemat are not guaranteed. In a year of high demand for raw materials, Mixemat will have 90,000 units available for Alphacap.

In low demand years, all product will be delivered. If Alphacap does not get raw materials from their suppliers, they need to buy them on the spot market to supply their customers. Alphacap relies on one major cell phone manufacturer for the majority of its business and failing to deliver could cause them to lose this contract, essentially putting the firm at risk.

Therefore, Alphacap will buy raw material on the spot market to make up for any shortfall. Spot prices for single-lot purchases (such as Alphacap would need) are $2.00 when raw materials demand is low and $4.00 when demand is high.

Demand in the raw materials market has a 75 percent chance of being high in the market each of the next two years. Alphacap sold 100,000 doublecaps last year and expects to sell 110,000 this year.

However, there is a 25 percent chance they will only sell 100,000. Next year, the demand has a 75 percent chance of rising 20 percent over this year and a 25 percent chance of falling 10 percent.

Alphacap uses a discount rate of 20 percent. Assume all costs are incurred at the beginning of each year (Year l's costs are incurred now and Year 2 costs are incurred in a year) and that Alphacap must make a decision with a two-year horizon. Only one supplier can be chosen as these two suppliers refuse to supply someone who works with their competitor.

Which supplier should Alphacap choose? What other information would you like to have to make this decision?

Verified Expert

Reference no: EM13859016

How you sell your idea to a high content versus low culture

Think of an idea you are passionate about. How would you sell your idea to a high content versus low content culture? How about a low power distance versus high power distan

The shipping pattern that will minimize transportation costs

1.Prescott Industries transports sand and stone extracted from its open pit mines located in Odessa and Bryan to its concrete block manufacturing facilities in Abilene, Tyler,

Describe company when the platform was initially discussed

Describe the company, the industry and when the platform was initially discussed. Which factors or drivers, using the textbook as a source, are in the firm's sustainability pl

Explain what is meant by the term value in a supply chain

What is meant by the term "value" in a supply chain. How can it be best measured in a supply chain? How does increasing value in a supply chain help align supply chain opera

Financial impact of supply chain disruptions

Given the financial impact of supply chain disruptions, discuss reasons why many firms fail to invest in supply chain risk management and what factors influence the decision t

Create a purchasing and supply chain plan for chilly willy

Use the business scenario provided to create a purchasing and supply chain plan for Chilly Willy - OEM manufacturer of refrigerated cases for grocery stores that sell their p

Determine the key components of supply chain management

Determine the key components of supply chain management for the company you have selected. Determine three (3) major issues that could affect the structuring, sourcing, pur

Determine the highest profit supply chain network

Build a model to determine the highest profit supply chain network, assuming all demand must be met for all three years of the problem's time horizon - How confident do you


Write a Review

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd