Use the Following Information to Determine Which Supplier for Steering

question 25

Essay

Use the following information to determine which supplier for steering wheels is more cost-effective using total cost analysis.Late delivery of the component results in 50% lost sales and 50% back orders of finished goods.
Table 1

Table 2

Here is the freight rates for
Truckload (TL ? 40,000 lbs): $0.90 per ton-mile
Truckload Less-than-truckload (LTL): $1.10 per ton-mile
Note: per ton-mile = 2,000 lbs.per mile; number of days per year = 365

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Definitions:

Memory Chips

Memory chips are semiconductor devices used in electronic systems to store data temporarily or permanently, such as RAM (Random Access Memory) or ROM (Read-Only Memory) in computers and other devices.

Minimum Cost

This refers to the lowest possible expense incurred in acquiring, producing, or maintaining a product or service without compromising quality or performance.

Marketable Securities

Liquid financial instruments that can easily be converted into cash, often used for short-term investments.

Cash Balances

Available cash on hand or in bank accounts that a company uses for daily operations.