Procurement Plan
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
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