The paper "Mapping of Existing Supply Chain and Calculation of Costs" is a perfect example of a finance and accounting assignment. The costs are divided into fixed, distribution from port to distribution Centre then to warehouse (Bisen & Srivastava, 2009). The fixed cost is further categorized as processing and quality assurance cost with the cost of $5 and $3 per CBM respectively. Therefore; Total fixed cost = Amount of CBM * Cost per CBM The results are as shown in the table above where the cost of processing is $950,000 and $570,000 for quality assurance check.
The total fixed cost is estimated at $1,520,000 as a sum of both costs. It represents 27% of the total cost. The second cost for consideration is moving the consignment from port to distribution Centre in Kansas and Seattle. The cost arrived at in the table above is calculated by the formula below; Cost to distribution Centre = CBM amount * Cost per CBM per mile * Distance NB: The Cost per CBM per mile is fixed at 0.0018. The transportation cost associated with the movement of the consignment from port to distribution Centre is two that is Seattle to Kansas and LA to Kansas which amounted to $360,126 and $223,839.
The total cost for this component amounting to $583,965. It represents 10% of the total cost incurred. The third cost component arises from moving the consignment from the distribution Centre to the warehouse. The company has nine warehouses in major US cities. The cost represents the highest proportion of the total incurred (63%). The cost to each warehouse above is calculated as follows; Cost to warehouse = CBM amount * Cost per CBM per mile * Distance NB: The Cost per CBM per mile is fixed at 0.022. The total cost incurred by the company in transportation amounts to $5,678,283 as the sum of the three cost components. Question two: Mapping of the upgraded supply system and calculation of annual costs Key Port Distribution Centre Warehouse New Distribution Centre Transportation from port to distribution Centre (0.0018 per CBM per Mile) Transportation from distribution Centre to the warehouse (0.022 per CBM per Mile).
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