(Solved): SEN Andes ductes Task 1 (10% of the final grade) CALANAN Which indicators would you use to compare ...

SEN Andes ductes Task 1 (10% of the final grade) CALANAN Which indicators would you use to compare/benchmark your company's purchasing performance with the performance of your main competitors? Propose at least 3 Indicators, explain your choice and how the Indicators are related to the main dimensions of measuring and evaluating purchasing activities. Task 2 (50%, each subtask counts for 10% of the final grade) As a buyer in a company producing pasta products, you are responsible for purchasing the ingredients, in particular flour products. The following information is provided: Annual demand per year: 80000 kg Order cost: 700 NOK per order Unit price from the current supplier: 8 NOK per kg Inventory cost: 18% of unit price a) What would be the optimal order size in kg to purchase per order (EOQ)? What are the total logistics costs per order and average capital invested in inventory per order? b) A new supplier is willing to give you a 2 % discount per kg price given that you order 12000 kg each time. Based on a net gains/loss calculation, should you switch the supplier? c) Suppose that you use the following criteria to select a supplier for flour: Criteria Existing supplier New supplier Price 8 NOK 7,84 Quality (non- 99% 98% failure rate) On-time delivery 96% 95% I Assuming that all criteria weight equally, which supplier will you choose using ranking or linear weighed method? Will your choice change if the price is weighed as 60%, and the other criteria as 20% each? d) Assume that this year your demand has doubled compared to the last year and is now 16020 kg. Your existing supplier stated that they usually experience an 80% learning curve effect. Which price can you plan to re-negotiate with your current supplier? e) For a special ingredient, gluten-free flour, the demand is not stable during the year, and the forecasting model provided an estimation of MAD (absolute average forecast error) to be 50 kg. What is the safety stock level for a service level of 95% (See the formula and safety factar table at the end)? How much more safety stocks is needed to increase the service level up to 98%? Why should companies in general keep the safety stocks?