Learning Materials
Features
Discover
Chapter 3: Q3CPFB (page 373)
Question:Where do opportunities reside in improving supply chain operations and how have VSM helped to reveal these?
Answer:
There could be more than one opportunity related to the supply chain out of which one of the most common opportunities is the reduction of the cost.
Over 30 million students worldwide already upgrade their learning with Vaia!
All the tools & learning materials you need for study success - in one app.
Get started for free
One of your Taiwanese suppliers has bid on a new line of molded plastic parts that are currently being assembled at your plant. The supplier has bid \(0.10 per part, given a forecast you provided of 200,000 parts in year 1; 300,000 in year 2; and 500,000 in year 3. Shipping and handling of parts from the supplier’s factory are estimated at \)0.01 per unit. Additional inventory handling charges should amount to \(0.005 per unit. Finally, administrative costs are estimated at \)20 per month. Although your plant can continue producing the part, the plant would need to invest in another molding machine, which would cost \(10,000. Direct materials can be purchased for \)0.05 per unit. Direct labor is estimated at \(0.03 per unit plus a 50 percent surcharge for benefits; indirect labor is estimated at \)0.011 per unit plus 50 percent benefits. Up-front engineering and design costs will amount to $30,000. Finally, management has insisted that overhead be allocated if the parts are made in-house at a rate of 100 percent of direct labor cost. The firm uses a cost of capital of 15 percent per year. What should you do, continue to produce in-house, or accept the bid from your Taiwanese supplier?
In value stream mapping, what does an arrow in the shape of a lightning bolt mean?
In a data box on a value stream map, what do the abbreviations CT and C/O mean?
What is the purpose of value stream mapping? How can it be achieved?
Is this strategically something that Grainger should do? What has it not been considered that may be important?
What do you think about this solution?
We value your feedback to improve our textbook solutions.
Explanations 
Textbooks 
Exams 
GCSE 
IGCSE 
AS 
A Level 
International A Level 
University Admissions Tests 
Flashcards 
Vaia AI 
Notes 
Study Plans 
Study Sets 
Find a job 
Find a degree 
Student Deals 
Magazine 
Mobile App