# The total cost of ownership per unit if we purchase

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The total cost of ownership per unit if we purchase everything from Dong Hai supply is:
Total annual cost = (A*R/Q) + 34,091.02 + 1850 Total annual cost = (105*21,500/406) + 34,091.02 + 1,850 Total annual cost = 41,515.06 \$ Total cost per unit = (41,515.06/21,500) = 1.93\$ 11. The least total cost provider of Schachtel Schmuggel Bannware is CousinsAg with a per- unit total cost of 1.93\$ compared to 4.42\$ per-unit total cost of Dong Hai Supply. 12. The two additional risks that we are considering are: a. The risk of damaged products: i. Optimal quantity increases the risk of damage: For both CousinsAg and Dong Hai Supply, the risk of damaged products will increase if we order optimal quantity because a TEU container can ship 600 units . If we decide to ship the containers not full, there is a high probability of receiving damaged products, but if we decide to ship containers with 600 units in each, we need to calculate the inventory carrying cost as well as the total cost and compare them with the costs we generated from our previous analysis. For Dong Hai Supply: Total AICC = warehouse carrying cost + in-transit carrying cost Total AICC = (((1/2* cycle stock) + safety stock)*V*W) + (R*V*W*T/365) Total AICC = ( 731 *80.11362*0.322) + (21,500*80.11362*0.322*(43/365)) Total AICC = 18,856.452+65,339.57 Total AICC = 84,196.02 \$ The total cost of ownership per unit if we purchase everything from Dong Hai supply is: Total annual cost = (A*R/Q) + 83,577.76 + 4393.23 Total annual cost = (182*21,500/ 600 ) + 84196.022 + 4393.23 Total annual cost = 95,110.91 \$ Total cost per unit = (95,110.91/21,500) = 4.42 \$ For CousinsAg: The total annual inventory carrying cost if we purchase everything from CousinsAg is: Total AICC = (((1/2* cycle stock) + safety stock)*V*W) + (R*V*W*T/365) Total AICC = ( 459 *85*0.322) + (21,500*85*0.322*(15/365)) Total AICC = 12,562.83 + 24,183.08 Total AICC = 36,745.91 \$ The total cost of ownership per unit if we purchase everything from CousinsAg is: Total annual cost = (A*R/Q) + 34,091.02 + 1850 Total annual cost = (105*21,500/ 600 ) + 37,745.91 + 1,850 Total annual cost = 42,358.41 \$ Total cost per unit = (42,358.41/21,500) = 1.97 \$
In case of shipping 600 units in a container: The overall cost per-unit for Dong Hai = 80.11+4.4 = 84.51\$ The overall cost per-unit for CousinsAg = 85 + 1.97 = 86.97\$ In case of shipping EOQ in a container: The overall cost per-unit for Dong Hai = 80.11+4.4 = 84.51\$ The overall cost per-unit for CousinsAg = 85 + 1.93 = 86.93\$ From our calculations, we conclude that the overall cost per-unit for Dong Hai Supply remains the same even though we increased the quantity to 600 units. However, the overall cost per-unit for CousinsAg, slightly increases by 0.04 \$. Therefore, we recommend the company to increase the quantity of containers to 600 units for both Dong Hai Supply and CousinsAg.
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