Silo Manufacturing Company (SMC) is situated in Beaune, France. The manufacturing company is a regional provider of grain tower, also referred to as silos, for farms. In particular, the core business of Silo Manufacturing Company is the production of the grain elevators. However, in recent periods, Silo Manufacturing Company has expanded and propagated their business to take into account the most recent and cutting-edge in agricultural engineering services for elevator design. In this case, the paper attempts to resolve a prevailing issue between Fred Ferguson, the Financial Comptroller and Peter Patrachalski, the Purchasing Director. These two executives both make different arguments regarding Silo Manufacturing Company's ordering policies and present different proposals (Frankel, 2013). The paper will also consider the Economic Order Quantity approach, which is proposed by Lewin to ascertain the right quantity that ought to be recommended.What is the cost difference between Ferguson's proposal to order 4 cases each time and Patrachalski's proposal to order 32 cases each time?
Carrying cost for inventory = 32%
Ordering costs = $48 irrespective of the quantity levels ordered.
The unit cost = $112
Every year units ordered = 10,752 units
1 case = 15 units
Average lead time = 8.2 days
Standard variation = 1.7 days
Ferguson and Patrachalski each offered proposals for ordering part number 64-1909.
1. Purchasing Director Patrachalski indicated...
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