In: Operations Management
Monkey's Fist is trying to determine where to source their product. In the past, they have sourced solely domestically, but they have sufficiently grown to look at international suppliers. Next month's expected demand is 12,000 units. There are three suppliers to choose from, one domestic, the other two offshore. The table below contains all relevant cost data. Note that both international shipping and inland freight costs are a flat fee for a shipment of up to 12,000 units of demand—whether shipping one unit, one thousand units, or 12,000 units, the cost is the same (the flat fee).
Criteria | Domestic | Foreign 1 | Foreign 2 |
---|---|---|---|
Price/Unit | $4.62 | $4.40 | $4.48 |
Packaging Cost/Unit | $0.11 | $0.21 | $0.22 |
Int'l Shipping/Entire Shipment | $0 | $500 | $850 |
Inland Freight/Entire Shipment | $250 | $300 |
$275 |
What is the total landed cost for the domestic supplier? (Display your answer as a whole number.)
What is the total landed cost for foreign supplier 1? (Display your answer as a whole number.)
What is the total landed cost for foreign supplier 2? (Display your answer as a whole number.)
Suppose actual demand is only 80% of expected demand. What would be the total landed cost of the Domestic Supplier? (Display your answer as a whole number.)
At what volume of monthly demand would the total cost be the same for the domestic supplier and foreign supplier 1? (Display your answer as a whole number.)