Reference no: EM13848725
You have recently been appointed Category Manager for nuts and bolts at IndustryCo, a manufacturer with a large demand for bolts at its three (3) factories. You have surveyed the market and found four (4) suppliers for a certain steady selling SKU, XA21R45. Your factories' weekly demand for bolts are:
Factory 1: 4,000 cases/week
Factory 2: 11,000 cases/week
Factory 3: 19,000 cases/week
Each of the four suppliers can provide the XA21R45, but they differ in unit price, weekly capacity, and distance to IndustryCo's three factories. The unit prices and the weekly capacity for each of the four suppliers are shown below:
Supplier 1: U.S. Ainbolt - Unit cost: 0.12 $/case Capacity 10,000 cases/week
Supplier 2: Der Bolt, Thun - Unit cost: 0.15 $/case Capacity 10,000 cases/week
Supplier 3: Li Tningbolt - Unit cost: 0.10 $/case Capacity 5,000 cases/week
Supplier 4: M. Bolton - Unit cost: 0.13 $/case Capacity 10,000 cases/week
You are trying to plan the weekly flow of bolts from these suppliers to your factories. Based on the current contract with your transportation carrier, the unit transportation cost for a case of bolts is $0.05 per mile from any of the suppliers to any of the factories. The distances between the four suppliers and the three factories are given in the tables below.
Factory 1 Factory 2 Factory 3
U.S. Ainbolt 400 700 850
Der Bolt, Thun 120 340 760
Li Tningbolt 500 500 680
M. Bolton 790 360 400
Currently, the factories operate independently. Disregarding any of the other factories, which supplier should Factory 1 select in order to have the lowest total (purchase and transport) cost for them?
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