Analyze costs and make recommendation regarding the shipping

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Reference no: EM133595543

Problem

Alison's Accessories is a high volume worldwide fashion house with outlets in 65 countries. Sadly, space does not permit an exhaustive list but once the test is over, check out their website. Kalil, the supply chain manager is conducting her usual thorough analysis of her final four candidates for supplier and has developed the following tables of pertinent costs and other shipping metrics. Regardless of supplier, Alison's Accessories will operate 220 days per year and has forecast annual demand of 250,000 units. Kalil has obtained quotes for three different shipment sizes (Freight Costs table). All costs are in US Dollars.

Unit costs

Supplier	Price/Unit	Carrying Cost
A	123	22
B	125	19
C	126	18
D	100	40

Annual Freight Costs

Supplier	15,000 units	25,000 units	50,000 units
A	380,000	260,000	237,000
B	615,000	547,000	470,000
C	285,000	240,000	200,000
D	380,000	260,000	237,000

Other Costs

Supplier	Lead Time	Annual Admin Costs
A	30	250,000
B	15	275,000
C	7	225,000
D	90	2,500,000

Use the date in Table 1. Analyze costs and make recommendations regarding the shipping options and suppliers. Which combination of shipping amount and supplier yields the lowest total cost?

Reference no: EM133595543

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