23 Jul HOW MUCH IS THE SAVING RESULTED ?
Harley Davidson purchases components from three suppliers. Components purchased from Supplier A are Show more Harley Davidson purchases components from three suppliers. Components purchased from Supplier A are priced at $ 5 each and used at the rate of 200000 units per year. Components purchased from Supplier B are priced at $ 4 each and are used at the rate of 50000 units per year. Components purchased from Supplier C are priced at $ 5 each and used at the rate of 22800 units per year. Currently Harley purchases a separate truckload from each supplier. As part of its JIT drive Harley has decided to aggregate purchases from the three suppliers. The trucking company charges a fixed cost of $ 400 for the truck with an additional charge of $100 for each stop. Thus if Harley asks for a pickup from only one supplier the trucking company charges $ 500; from two suppliers it charges $ 600; and from three suppliers it charges $ 700. Harley incurs a holding cost of 20% (of the price) for each component. What is the minimal annual inventory cost of the Harleys current strategy of ordering separately from each supplier ? How much is the saving resulted ? Show less
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