Silo Manufacturing Company Essay

PAGES
4
WORDS
1017
Cite

Silo Manufacturing Company (SMC) is situated in Beaune, France. The manufacturing company is a regional provider of grain tower, also referred to as silos, for farms. In particular, the core business of Silo Manufacturing Company is the production of the grain elevators. However, in recent periods, Silo Manufacturing Company has expanded and propagated their business to take into account the most recent and cutting-edge in agricultural engineering services for elevator design. In this case, the paper attempts to resolve a prevailing issue between Fred Ferguson, the Financial Comptroller and Peter Patrachalski, the Purchasing Director. These two executives both make different arguments regarding Silo Manufacturing Company's ordering policies and present different proposals (Frankel, 2013). The paper will also consider the Economic Order Quantity approach, which is proposed by Lewin to ascertain the right quantity that ought to be recommended.What is the cost difference between Ferguson's proposal to order 4 cases each time and Patrachalski's proposal to order 32 cases each time?

Carrying cost for inventory = 32%

Ordering costs = $48 irrespective of the quantity levels ordered.

The unit cost = $112

Every year units ordered = 10,752 units

1 case = 15 units

Average lead time = 8.2 days

Standard variation = 1.7 days

Ferguson and Patrachalski each offered proposals for ordering part number 64-1909.

1. Purchasing Director Patrachalski indicated...

...

In addition, he pointed out that he would wish to evade ordering in half-done cases for the reason that doing so may give rise to shipments of improper quantities and resulting higher costs (Frankel, 2013).
Number of units = 32 x 15 = 480 units

Total Unit Costs = 112 x 10, 752 = $1,204,224

Total Ordering Costs = (10,752 / 480) x 48 = $1,075.20

Total Carrying Costs = 32% x 112 x (480/2) = $8,601.60

Total Costs = $1,204,224 + $8,601.60 + $1,075.20 = $1,213,900.8

Therefore, the total cost incurred from Patrachalski's proposal is $1,213,900.8

2. Comptroller Ferguson appealed the most imperative issue for Silo Manufacturing Corporation was the cost to carry inventory and contended for ordering four cases at one go to maintain low average inventories (Frankel, 2013).

Number of units = 4 x 15 = 60 units

Total Unit Costs = 112 x 10, 752 = $1,204,224

Total Ordering Costs = (10,752 / 60) x 48 = $8,601.60

Total Carrying Costs = 32% x 112 x (60/2) = $1,075.20

Total Costs = $1,204,224 + $8,601.60 + $1,075.20 = $1,213,900.8

Therefore, the total cost incurred from Ferguson's proposal is $1,213,900.8

Cost difference = $1,213,900.8 - $1,213,900.8 = $0

The cost difference between Ferguson's proposal to order 4 cases each time and Patrachalski's proposal to order…

Cite this Document:

"Silo Manufacturing Company" (2016, December 12) Retrieved April 25, 2024, from
https://www.paperdue.com/essay/silo-manufacturing-company-essay-2167820

"Silo Manufacturing Company" 12 December 2016. Web.25 April. 2024. <
https://www.paperdue.com/essay/silo-manufacturing-company-essay-2167820>

"Silo Manufacturing Company", 12 December 2016, Accessed.25 April. 2024,
https://www.paperdue.com/essay/silo-manufacturing-company-essay-2167820

Related Documents

Product Returns is a third process area that Imperial Tobacco has to contend with, specifically from its distributors and channel partners. Typically Tobacco products are returned if a specific lot of tobacco or packaging has been found to be defective. There have at times been product recalls as defined by governments. A third reason for product returns is when a product has been discontinued and Imperial is not willing to

The business culture of the United Kingdom is characterized by the value of free economy and private property (Rendtorff, 2009). At another level, it is marked by a desire to manage work and life issues. The employees in British organizations have long been marked out for their relatively leisurely pace of work and their priority for relationship issues over work related issues. Compared with their American counterparts, employees in UK

Recommendations The key competitive advantages that Ford Motor Company of Canada must concentrate on include the following. First, the continue growth of supplier relationship management and tight integration at the quality level of sourcing and procurement (Baker, Artinian, 1985) is critical. This will alleviate any increases in the 78% of their cost structures that are dedicated to sourcing and procuring products, well above industry norms. Second, the use of R&D funds

From that vantage point it is clear that ERP systems may not be able to provide the depth and breath of unification that is possible with more advanced approaches to using it systems. Another drawback or con of using ERP systems has the catalyst of creating a more unified socio-technical system is the fact that they are often implemented and measured on a department or functional basis first. Interpolating their

Measuring IT Value The progression of how enterprises measure information technologies' (IT) performance has been a progression from inward-centric metrics of performance to advanced analytics that capture contributions to strategic objectives. Chief Information Officers (CIOs) often measure their performance by cost reduction and system consolidation while Chief Executive Officers (CEOs) measure IT by the contribution to new business growth (Trkman, McCormack, de Oliveira, Ladeira, 2010). There are many strategic frameworks that

" In those manufacturers who are attaining lean enterprise-level performance, the cultures of their companies have become incredibly focused on metrics, and in fact the organizations themselves have become so metrically driven that the culture itself embraces the concept of measuring performance and improvement (Nash, Poling 2007). Lean positioned for cost cutting vs. customer-driven change. This is also a critical mistake many manufacturers make, and often becomes the main focus these