23 Feb FamCom Electrical Equipment Manufacturers needs to secure its supply of copper for the next year. The price of copper is extremely volatile because of huge month-to-month variation in demand
engineering multi-part question and need an explanation and answer to help me learn.
Logistics & Supply Chain Engineering
please find the attached PDF file, I need the complete answer with th explanaitions in word document and also the excel file for the calculations
as I would like to see the solving steps in the word document.
MEM 514 Assignment 2: Supply Chain Integration Problem 1 FamCom Electrical Equipment Manufacturers needs to secure its supply of copper for the next year. The price of copper is extremely volatile because of huge month-to-month variation in demand. FamCom wants to break even with a hedge against future copper prices. Currently, the market price for copper is reasonably low at $3.25 per pound or $325 (CWT). FamCom has entered into a contract with the supplier for 500,000 pounds of copper per month starting in January at market prices. FamCom has also entered into a futures contract with a financial institution for 500,000 pounds per month at $3.25 per pound. Note: CWT (hundredweight) is equal to 100 pounds in the United States. a. Calculate the 1-month financial and the physical results if the market price of copper has risen to $4.50 per pound. b. Calculate the 1-month financial and the physical results if the market price of copper has fallen to $3.00 per pound. Problem 2 Beta Solutions and Alpha Limited are two well-established suppliers of inexpensive tools. AllHere Projects is a national chain of retail outlets that caters to the occasional fixer-upper who would prefer to get the job done fast rather than investing in a well-appointed tool box. AllHere Projects wants to find a supplier for a particular tool set that promises to be a big seller. Expected annual sales are 100,000 units. AllHeres warehouses operate 50 weeks a year. Management collected data on the two suppliers, which are contained in the first table. a. Which of the two suppliers would provide the lowest annual cost to AllHere Projects? What shipping quantity would you suggest? b. Before management could make a decision, another option became available. Zeta Tools offered the tool set for only $8.00; however, the lead time is longer than the other two suppliers. Zeta is a new supplier and has not been in the industry very long. Additional data for Zeta are in the second table. Supplier Freight Costs/Shipping Quantity Price/Unit Annual Holding Cost/Unit Lead Time (wk) Annual Administrative 10000 25000 50000 Cost Beta $35,000 $25,000 $18,000 $8.10 $1.62 6 $10,000 Alpha $40,000 $28,000 $19,000 $8.10 $1.62 4 $15,000 Supplier Freight Costs/Shipping Quantity Price/Unit Annual Holding Cost/Unit Lead Time 10000 25000 50000 (wk) Zeta $45,000 $25,000 $17,000 $8.00 $1.60 7 Management has begun to assess the administrative costs to manage the contract with Zeta. What is the lowest level of administrative costs at which AllHere Projects would be indifferent between using Zeta versus the option you chose in part (a)? Problem 3 LogX Logistics anticipates that it will need more distribution center space to accommodate what it believes will be a significant increase in demand for its final mile services. LogX could either lease public warehouse space to cover all levels of demand or construct its own distribution center to meet a specified level of demand, and then use public warehousing to cover the rest. The yearly cost of building and operating its own facility, including the amortized cost of construction, is $12.00 per square foot. The yearly cost of leasing public warehouse space is $20.00 per square foot. The expected demand requirements follow: Requirements (sq. ft.) 200,000 300,000 400,000 500,000 Probability 0.4 0.3 0.2 0.1 a. Calculate the expected value of leasing public warehouse space as required by demand. b. Calculate the expected value of building a 200,000-square-foot distribution center and leasing public warehouse space as required if demand exceeds the need for 200,000 square feet of space. c. Calculate the expected value of building a 300,000-square-foot distribution center and leasing public warehouse space as required if demand exceeds the need for 300,000 square feet of space. d. Calculate the expected value of building a 400,000-square-foot distribution center and leasing public warehouse space as required if demand exceeds the need for 400,000 square feet of space. e. Calculate the expected value of building a 500,000-square-foot distribution center. f. Which of these decisions provides the minimized expected value?
Requirements: long enough to show all the explanations for the assignment
MEM 514 Assignment 2: Supply Chain Integration Problem 1 FamCom Electrical Equipment Manufacturers needs to secure its supply of copper for the next year. The price of copper is extremely volatile because of huge month-to-month variation in demand. FamCom wants to break even with a hedge against future copper prices. Currently, the market price for copper is reasonably low at $3.25 per pound or $325 (CWT). FamCom has entered into a contract with the supplier for 500,000 pounds of copper per month starting in January at market prices. FamCom has also entered into a futures contract with a financial institution for 500,000 pounds per month at $3.25 per pound. Note: CWT (hundredweight) is equal to 100 pounds in the United States. a. Calculate the 1-month financial and the physical results if the market price of copper has risen to $4.50 per pound. b. Calculate the 1-month financial and the physical results if the market price of copper has fallen to $3.00 per pound. Problem 2 Beta Solutions and Alpha Limited are two well-established suppliers of inexpensive tools. AllHere Projects is a national chain of retail outlets that caters to the occasional fixer-upper who would prefer to get the job done fast rather than investing in a well-appointed tool box. AllHere Projects wants to find a supplier for a particular tool set that promises to be a big seller. Expected annual sales are 100,000 units. AllHeres warehouses operate 50 weeks a year. Management collected data on the two suppliers, which are contained in the first table. a. Which of the two suppliers would provide the lowest annual cost to AllHere Projects? What shipping quantity would you suggest? b. Before management could make a decision, another option became available. Zeta Tools offered the tool set for only $8.00; however, the lead time is longer than the other two suppliers. Zeta is a new supplier and has not been in the industry very long. Additional data for Zeta are in the second table. Supplier Freight Costs/Shipping Quantity Price/Unit Annual Holding Cost/Unit Lead Time (wk) Annual Administrative Cost 10000 25000 50000 Beta $35,000 $25,000 $18,000 $8.10 $1.62 6 $10,000 Alpha $40,000 $28,000 $19,000 $8.10 $1.62 4 $15,000 Supplier Freight Costs/Shipping Quantity Price/Unit Annual Holding Cost/Unit Lead Time (wk) 10000 25000 50000 Zeta $45,000 $25,000 $17,000 $8.00 $1.60 7 Management has begun to assess the administrative costs to manage the contract with Zeta. What is the lowest level of administrative costs at which AllHere Projects would be indifferent between using Zeta versus the option you chose in part (a)? Problem 3 LogX Logistics anticipates that it will need more distribution center space to accommodate what it believes will be a significant increase in demand for its final mile services. LogX could either lease public warehouse space to cover all levels of demand or construct its own distribution center to meet a specified level of demand, and then use public warehousing to cover the rest. The yearly cost of building and operating its own facility, including the amortized cost of construction, is $12.00 per square foot. The yearly cost of leasing public warehouse space is $20.00 per square foot. The expected demand requirements follow: Requirements (sq. ft.) 200,000 300,000 400,000 500,000 Probability 0.4 0.3 0.2 0.1
a. Calculate the expected value of leasing public warehouse space as required by demand. b. Calculate the expected value of building a 200,000-square-foot distribution center and leasing public warehouse space as required if demand exceeds the need for 200,000 square feet of space. c. Calculate the expected value of building a 300,000-square-foot distribution center and leasing public warehouse space as required if demand exceeds the need for 300,000 square feet of space. d. Calculate the expected value of building a 400,000-square-foot distribution center and leasing public warehouse space as required if demand exceeds the need for 400,000 square feet of space. e. Calculate the expected value of building a 500,000-square-foot distribution center. f. Which of these decisions provides the minimized expected value?
