Question

Item	Supplier	Category	Cost per Unit	Annual Spend	SPI
A1	DGF9	aa	0.85	30000	1.2
A1	DGF5	aa	0.8	16800	1.38
A1	DGF0	aa	0.9	5000	1.1

1. For item A1, using the Cost-based system, what is the total unit cost of A1 for supplier DGF5?

2. For item A1, using the Cost-based system, which supplier has the lowest total unit cost?

3. For item A1, based on the Cost-based system, is the current volume allocation reasonable?

4.

For item A1, using the Cost-based system, which of following conditions would not justify the current volume allocation?

a.

DGF0 is a minority owned business.

b.

DGF0 does not have enough capacity.

c.

DGF0 has a very low service rating.

d.

DGF9 has the highest service rating.

Answer 1

1. For item A1, using the Cost-based system, what is the total unit cost of A1 for supplier DGF5?

2. For item A1, using the Cost-based system, which supplier has the lowest total unit cost?