Purchase Solution

Suppliers' assessment exercise

Not what you're looking for?

Ask Custom Question

Clean Car Solutions (CCS), a manufacturer of car and two-wheeler engines, has purchased a1000 bearings per week from a local supplier who charges $1 per bearing. Recently during a Trade Exhibition, the CEO of CCS has identified another potential source willing to supply the bearings at $0.95 per bearing. Before making his decision, the CEO wants to evaluate the performance of the two suppliers.

The local supplier has an average lead time of 2 weeks and has agreed to deliver the bearings in batches of 2000. Based on past on-time performance, the CEO estimates that the lead time has a standard deviation of one week. The new sources, located in another city, has an average lead time of 6 weeks and a standard deviation of 4 weeks. The new source would also require a minimum batch size of 8000 bearings.

Which supplier should the CEO go with? CCS has a holding cost of 30%. It currently uses a continuous review policy for managing inventory and aims for a cycle service level of 95%. Weekly demand has a mean of 1000 and a standard deviation of 300.

If the local supplier decided to drop his price by 1 cent, would it change the CEO's decision?

Purchase this Solution

Solution Summary

Solution depicts the steps to assess the competing suppliers and then select the most economic one.

Solution provided by:
Education
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
Recent Feedback
  • "Thank you"
  • "Really great step by step solution"
  • "I had tried another service before Brain Mass and they pale in comparison. This was perfect."
  • "Thanks Again! This is totally a great service!"
  • "Thank you so much for your help!"
Purchase this Solution


Free BrainMass Quizzes
Graphs and Functions

This quiz helps you easily identify a function and test your understanding of ranges, domains , function inverses and transformations.

Geometry - Real Life Application Problems

Understanding of how geometry applies to in real-world contexts

Solving quadratic inequalities

This quiz test you on how well you are familiar with solving quadratic inequalities.

Probability Quiz

Some questions on probability

Exponential Expressions

In this quiz, you will have a chance to practice basic terminology of exponential expressions and how to evaluate them.