Essay by PaperNerd ContributorUniversity, Master's September 2001

download word file, 6 pages 0.0

Total Landed Cost A Company "“ a retailer operating under a superstore concept "“ is interested in improving their understanding of shipping, handling and storage costs early on in the decision making process. The buyer at A Company is tasked with determining what is best for A Company when best is a combination of supplier volume discounts; transportation weight breaks and FCL (full container load) discounts; storage and handling fees; and labeling and shelving fees. A vision has been developed that a buyer would have a set of tools available to him enabling him to calculate the total costs associated with various economic order/lot sizes and to determine the best order quantity and packaging for A Company. This capability clearly would improve the overall financial performance improving efficiencies, freeing up space in warehouses and streamlining fulfillment processes across the company. Service Company is pleased to have the opportunity to describe our tools and how we might facilitate the solution that A Company has envisioned.

The paragraphs below describe how Service Company can assist with existing product and how we might jointly build new tools that complete the solution.

A day in the life of a Purchase Order Let's follow a A Company buyer as he creates an order. (Service Company does not have a deep understanding of the systems and processes used by A Company's buyers. Please use this description as an illustration or example not as an description of A Company's business). The buyer has been in contact with his suppliers. The supplier has offered several levels of pricing: a. Each item costs $100 b. If 100 items are ordered, then a volume discount of 20% is available.

A Company's buyer knows that historically A Company sells only 20 of these items per month. Therefore, it is...