# Procurement Plan

Pages: 11 (2769 words) Published: March 11, 2013
Procurement planning Case Problem
Question 1
1 Machine| Quantity| Unit Price| Total|
| | | |
Moulding|  | \$285,000/unit | \$304,950 |
Resin| 125,000kg| \$2 /kg| \$250,000 |
Labour| 4,166 Hours| \$18/Hour | \$74,988 |
OH|  | | \$86,236.20 |
Opportunity Cost|  | | \$80,000 |
Total Cost|  |  | \$796,174 |
| | | |
Purchasing| Quantity| Unit Price| Total|
Purchase| 250,000 units| \$3/unit| \$750,000 |
OH| 100 orders| \$50/order| \$5,000 |
Inspection|  | | \$35,000 |
Total Cost|  | | \$790,000|
2 Machines | Quantity| Unit Price| Total|
Moulding|  | \$285,000/unit| \$304,950.00 |
Resin| 125,000kg| \$2 /kg| \$250,000.00 |
Labour| 8,332 Hour| \$18 /Hour| \$149,976.00 |
OH|  | | \$172,472.40 |
Opportunity Cost|  | | \$160,000.00 |
Total Cost|  |  | \$1,037,398.40 |
According to calculation above, because there are two machines in Firebird, such that difference in total costs will take place when either one or two are in use. Moulding unit’s future value is: \$304,950=PV×(1+r)n=\$285,000×1.071 Resin cost is: 125,000kg×\$2/kg=\$250,000.

When one machine is in use, two labours are required so it will be 2083 hour/labour×2 labours×\$18/labour=\$74,988 and cost would be double as \$149,976 when two machines are in use as well as overhead costs. In terms of opportunity cost, as descripted in assumption, it is the cost that if the plant was not invested. Therefore, when one machine is in use, opportunity cost is \$80,000, and it will double when two in use. Thus, based on above results, purchasing method will be suggested because it costs less than the other two options. Question 2: Cost to the Society

Unemployment
I. Stresses of possibly losing their ability to earn a living and support their families and indulging in criminal and illegal activities. II. Unemployment at home, along with movement to other areas/ countries, most workers at home country displaced by the loss of their jobs are forced to take pay cuts in order to gain reemployment. Statistics from the U.S Labour Department (Whalen, 2005) show that a third of all workers forced to find new jobs during a company's outsource downsizing will settle for a 20 percent reduction in pay. Affect on communities

The local communities are also affected by it. Some communities in the U.S. are formed around, and rely on, one or more corporations based there. If companies decide to outsource and move jobs away from the communities, the workers are then forced to find new jobs. Honda, a Japanese car manufacturer, is one large importer of foreign services. At Honda’s plant and its subsidiaries in Marysville, Ohio employ over 12,000 employees in that area (Honda, 2007). Health Issues

I. According to WHO (2005) report by Krzyzanowski, Dibbert and Schneider, the activities of the transport industry including highway vehicles, marine engines, locomotives and aircraft release several million tons of gases each year into the atmosphere, especially carbon emission. It affects air quality causing damage to human health, which are associated with cancer, cardiovascular, respiratory and neurological diseases. II. The transport noise emanating from the movement of transport vehicles and the operations of marine transport, airports and rail yards affects human health, through an increase in the risk of cardiovascular diseases. Fuel, chemical and other hazardous particulates discarded also contaminate rivers, lakes, wetlands and oceans.

Question 3: Supplier Selection and Evaluation Process
Step 1 Define needs and objective
I. Setting list of requirements needed from the supplier and set the objectives. II. Setting criterias to evaluation methods. Under the main catergories of pricing strcutre, deleivery, product quality and serivce (Beil, 2009). Step 2 -Identifying a limited Pool of Suppliers

I. Gathering a group of suppliers by elimating suppliers that does not meet...

Please join StudyMode to read the full document