case analysis
Silo Manufacturing Corporation
1. The cost for Ferguson’s 4 case proposal and Patrachalski’s 32 case proposal is exactly the same with a cost of $1,213,900.80.
2. Based on the lowest total annual cost, the order quantity Martin should recommend should be 170 units or 11.33 cases.
3. If order quantity is decreased to the nearest whole case then the total annual cost would change 2.9%. If order quantity is increased to the nearest whole case the annual cost would change 2.82%.
4. If vice president of Sales Steve Smith achieves his goal to increase sales by 9.6%, the cost to place an order would be $43.95.
5. If vice president of Sales Steve Smith achieves his goal to increase sales by 9.6% and Financial Comptroller Fred Ferguson achieves his goal of reducing the cost to carry inventory from 32% to 29.4% the cost to place an order would be $40.38.
6. If vice president of Sales Steve Smith achieves his goal to increase sales by 9.6% and Financial Comptroller Fred Ferguson achieves his goal of reducing the cost to carry inventory from 32% to 29.4% and purchasing director Peter Patrachalski achieves his goal of reducing the average cost per unit by 5.2%, then the cost to place an order would be $38.28.
7. If Davis implemented a just-in-time approach to ordering 1 unit at a time the cost to place an order would be $48.001667.
8. There first recommendation I would make in order to lower cost to place an order would be to reduce the supply base and narrow our suppliers down. By doing this, we will be able to get better deals on inventory and overall lower the ordering costs. The next recommendation I would make would be to utilize our bulk discounts. By ordering materials in higher quantity it reduces supply costs, overall shipping costs and increases productivity by lowering human interaction. The last recommendation I would make would be to estimate reserves accurately. This way there won’t be any year-end surprises and they won’t be way over or way
1. The cost for Ferguson’s 4 case proposal and Patrachalski’s 32 case proposal is exactly the same with a cost of $1,213,900.80.
2. Based on the lowest total annual cost, the order quantity Martin should recommend should be 170 units or 11.33 cases.
3. If order quantity is decreased to the nearest whole case then the total annual cost would change 2.9%. If order quantity is increased to the nearest whole case the annual cost would change 2.82%.
4. If vice president of Sales Steve Smith achieves his goal to increase sales by 9.6%, the cost to place an order would be $43.95.
5. If vice president of Sales Steve Smith achieves his goal to increase sales by 9.6% and Financial Comptroller Fred Ferguson achieves his goal of reducing the cost to carry inventory from 32% to 29.4% the cost to place an order would be $40.38.
6. If vice president of Sales Steve Smith achieves his goal to increase sales by 9.6% and Financial Comptroller Fred Ferguson achieves his goal of reducing the cost to carry inventory from 32% to 29.4% and purchasing director Peter Patrachalski achieves his goal of reducing the average cost per unit by 5.2%, then the cost to place an order would be $38.28.
7. If Davis implemented a just-in-time approach to ordering 1 unit at a time the cost to place an order would be $48.001667.
8. There first recommendation I would make in order to lower cost to place an order would be to reduce the supply base and narrow our suppliers down. By doing this, we will be able to get better deals on inventory and overall lower the ordering costs. The next recommendation I would make would be to utilize our bulk discounts. By ordering materials in higher quantity it reduces supply costs, overall shipping costs and increases productivity by lowering human interaction. The last recommendation I would make would be to estimate reserves accurately. This way there won’t be any year-end surprises and they won’t be way over or way