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Analysing costs associated with direct purchase from Jardensteel

To evaluate if purchasing the required slit steel directly from Jardensteel is the better option we need to evaluate all the costs associated with the purchase.

As per the past information that Atmel Ltd have all the two companies are from the locality and have in previous occasions worked with the firm. In their previous engagement the companies have proven to be reliable vendors who can be relied upon for delivery of quality products.

The time taken to deliver the required slits from Jardensteel to Atmel is 15 days from the day a purchase order is put in place.

On the other hand, it takes 5 days to deliver the 49-cm width steel to Parker from Jardensteel, Parker on the other hand takes 10 days to deliver the required slits to Atmel which in total makes the delivery time to be 15 days from the time a purchase order is placed at Jardensteel.

This indicates that the delivery time is similar in both options and should not be a variable of concern when making the purchase decision.

Costs associated with purchasing the required steel from Jardensteeel

As per the invoice

Cost of 5cm width steel 

60*215=$12900

Cost of 9cm width steel

85*210=$17850

The total cost of steel is

$12900+$17850=$30750

Freight and handling cost

$12*145=$1740

The total cost of purchasing the products directly from Jardensteeel will then be 

Material cost plus transport freight and handling cost 

 

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