Minimum Purchase Cost

If the manufacturer and retailer were to carry no inventory and all production and orders followed customer order placement, the product purchase price paid by the customer would be minimized. Notice that this corresponds to a make-to-order system at the manufacturer and assumes 

If the goal of the supply chain is to minimize purchase cost, then this approach offers a supply chain structure that enables that performance metric to be rninitnized. But will the customer wait for delivery in such a system If not, alternate configurations will be appropriate. 

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Another option used by pharmacies is to purchase directly from a pharmaceutical manufacturer. However, many manufacturers have substantial minimum purchase requirements, making it less favorable to buy from the manufacturer. Pharmacies may be receiving discounts based on volume purchased from the wholesaler thereby giving an incentive to the pharmacy to buy most of its products from one wholesaler. Wholesalers also offer next-day delivery and other value-added services that help pharmacy managers minimize inventory costs. Thus most pharmacies do not purchase products from manufacturers very often. 

Figure 10.29 shows the designs for three HENs, having minimum utilities, at three values of Ar j 30, 25.833, and 16.9 K. For the first two, in Figures 10.29a and 10.29b, using the method of Linnhoff and Hindmarsh (1983), stream splitting is required below the first pinch. Stream Cl is split into two streams between the pinches because just streams HI and H2 are present. Below the second pinch, stream Cl is split into three streams because all three hot streams are present. As shown in Table 10.6, both the purchase and utility costs are lower at The former is reduced because the cooling water exchanger is no longer needed. At Ar, = 16.9 K, the HEN is much simpler because no pinches exist, as shown in Figure 10.29c. Hence, the purchase cost is lower and the cost of utilities is equal to that at...

In making buy decisions, you know which overhead activities - such as supply of materials, transport, time at partner company, return transport, etc. - generate which additional costs. Even a standard purchased part generates more than the minimum purchase price and transport costs before it is available from your warehouse (Fig. 35). 

If two different machines (a and P) are under consideration, the most attractive one to purchase may be decided on the basis of minimum annual cost. The following example will illustrate the principles involved. 

It may be possible for a company to negotiate the purchase of a material at a cost per unit that is significantly lower than the current pubhshed price. This is particularly true if large quantities are involved. Thus, estimates should be presented for both minimum and maximum costs. Price trends, availabihty, and quality are other factors that should be considered. A knowledge of price trends is particularly important for a product that a company may not manufacture for sever years. 

Table E11.4B lists information about the different levels of steam, and Table El 1.4C gives the demands on the system. To meet the electric power demand, electric power may be purchased from another producer with a minimum base of 12,000 kW. If the electric power required to meet the system demand is less than this base, the power that is not used will be charged at a penalty cost. Table El 1.4D gives the costs of fuel for the boiler and additional electric power to operate the utility system.

Two basic procurement functions exist for resale or purchasing for consumption or conversion (Dobler et al. 1977, p. 4). Procurement is a core function of the business (Dobler et al. 1977, p. 5). Key objectives in procurement are to procure specified objects at a defined quality from suppliers, achieve cost savings and minimum prices for these objects and ensure continuous supply and foster joined innovations with suppliers based on contracts and a supplier relationship management. 

Wash performance is crucial for the consumer. Stain removal, anti-graying, and color stability with no dye transfer are all important, as these are visible parameters that inform the next purchase choice. Less visible is scale inhibition to protect the machine. The laundry market is highly competitive, so that although chelants are only a small part of the formulation, purchasers want to keep the cost of this part of a package to a minimum. As a result, they are generally only willing to pay a small premium for biodegradability of alternative chelants... 

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