Week 5 6 Suggested Answers
Tutorial 5
Suggested answers of the tutorial questions
EXERCISE 15.31 Customer response time
1
Date
March
April
Days taken Action
10
LO’s order received by sales department
0
0
14
Order forwarded to manufacturing department
4
4
28
Fabric received from supplier
14
18
8
26
5
Manufacturing commenced
16
Manufacturing completed and order sent to warehouse
30
Order delivered to customer
11
14
Total customer response time
2
3
Cumulative days Order receipt time (days)
Waiting time
Production time
Production cycle time
Delivery time
Total customer response time (days)
37
51
51
4
22
11
33
14
51
ST’s customer response time can be improved by the following:
Sales orders should be forwarded to the manufacturing department immediately they are received.
Manufacturing should order supplies (if required) immediately.
Manufacturing should only source suppliers who can supply materials with minimum delay.
Manufacturing needs to assess production capacity constraints and identify if outsourcing need to be used in times of full capacity and/or if capacity need to be increased.
Completed orders need to be delivered immediately to customers and not stockpiled in the warehouse.
The use of subcontractors for deliveries could be investigated.
Page | 1
PROBLEM 15.34 Analysis of supplier costs; supplier performance measures: manufacturer
1
Supplier A
Activity
cost per unit of activity No. of driver activities
$
Activity
Unit level
Rework due to low quality tiles $50
Downtime: Late delivery
260
Order level
Order components
200
Receive order
1 500
Inspect order
250
Return material to supplier
210
Pay supplier
190
Dispute invoice
480
Supplier related
Supplier relationship manager $90 000
Total supplier activity costs Purchase cost
Total cost of ownership
Supplier performance index Supplier B
No. of activit ies
$
Supplier C
No. of activiti es
$
Supplier D
No. of activit ies
$
11
20
$550
5 200
10
60
$500
15 600
0
10
$0
2 600
0
10
$0
Suggested answers of the tutorial questions
EXERCISE 15.31 Customer response time
1
Date
March
April
Days taken Action
10
LO’s order received by sales department
0
0
14
Order forwarded to manufacturing department
4
4
28
Fabric received from supplier
14
18
8
26
5
Manufacturing commenced
16
Manufacturing completed and order sent to warehouse
30
Order delivered to customer
11
14
Total customer response time
2
3
Cumulative days Order receipt time (days)
Waiting time
Production time
Production cycle time
Delivery time
Total customer response time (days)
37
51
51
4
22
11
33
14
51
ST’s customer response time can be improved by the following:
Sales orders should be forwarded to the manufacturing department immediately they are received.
Manufacturing should order supplies (if required) immediately.
Manufacturing should only source suppliers who can supply materials with minimum delay.
Manufacturing needs to assess production capacity constraints and identify if outsourcing need to be used in times of full capacity and/or if capacity need to be increased.
Completed orders need to be delivered immediately to customers and not stockpiled in the warehouse.
The use of subcontractors for deliveries could be investigated.
Page | 1
PROBLEM 15.34 Analysis of supplier costs; supplier performance measures: manufacturer
1
Supplier A
Activity
cost per unit of activity No. of driver activities
$
Activity
Unit level
Rework due to low quality tiles $50
Downtime: Late delivery
260
Order level
Order components
200
Receive order
1 500
Inspect order
250
Return material to supplier
210
Pay supplier
190
Dispute invoice
480
Supplier related
Supplier relationship manager $90 000
Total supplier activity costs Purchase cost
Total cost of ownership
Supplier performance index Supplier B
No. of activit ies
$
Supplier C
No. of activiti es
$
Supplier D
No. of activit ies
$
11
20
$550
5 200
10
60
$500
15 600
0
10
$0
2 600
0
10
$0