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Supreme Sound Case Study

In: Business and Management

Submitted By ryancurley
Words 1029
Pages 5
Ryan Curley
April 1, 2013
Supply Chain
Professor Power

Supreme Sound Explosion

1)
400 units needed per month

W1: delivery once a week, $832, transit time of 2 days; unit cost=$832*4=$3328/400units=$8.32/unit (origin)
W2: delivery every other week, $932, transit time of 1 day; unit cost=$932*2=1864/400units=$4.66/unit (destination)

T1: delivery once per week, $689, transit time of 5 days; unit cost=$689*4=2756/400units=$6.89/unit (destination)
T2: delivery twice a week, $669, transit time of 2 days; unit cost=$669*8=5352/400units=$13.38/unit (origin)

2) The delivery costs vary among each option due to the number of times per month that shipments are delivered. The freight cost per delivery is set and that number is then multiplied by the number of deliveries per month. This number is then divided by 400, the required number of units per month to determine the delivery cost per unit.

3) Demand is already set at 400 units per month. This means they may as well go with the most cost-efficient option. W2 and T1

4) W2: FOB destination, freight collect: If you tell the shipper that you will pay the cost when it arrives, then they will ship it "freight collect", meaning the trucking company will need a check payable to them when they deliver your item. If you have an account with a certain trucking company, then you can request that the shipper use that company so that you may be billed. It will still be "Freight Collect", but will be automatically billed to you by the company that you use.

Buyer pays freight charges
Buyer bears freight charges
Seller owns goods in transit
Seller files claims (if any)

T1: FOB destination, freight collect and allowed
Buyer pays freight charges
Seller bears freight charges
Seller owns goods in transit
Seller files claims (if any)

5) Additional issues/costs in the supply chain * Infrastructure (roads, ports, highways) * Government regulations * Carrier costs (vehicle related costs, fixed operating costs, trip-related costs)

Supreme Sound Explosion has hit the jackpot with their new product. Speakers with a significant amount of more sound than its competitors means a significant amount of more money for SSE. The Blasters attract high-class potential customers such as the Rolling Stones and U2’s of the world. These giants want to reduce the number of sound components they bring with them on tour. With more than 100 decibels of additional sound from just one speaker, it’s a gift from the rock gods. This allows the bands to reduce tour costs by streamlining sound equipment as well as cutting down on the number of trucks needed to transport all the equipment. The loading, unloading, setup, and tear down costs are all significantly reduced. This allows for even more shows and more tour stops which leads to more capital for the artists.
With regards to delivery options, Supreme Sound has been presented with 4 options. Upon calculation, it is clear that W2 and T1 are the options I would recommend. This is easy to see simply by taking the cost per delivery, finding out how many deliveries occur each month, and finally dividing by 400 which is the number of units needed each month. However, this is clearly inaccurate due to the lack of information in the case. Nowhere in the case does it say how many units are in each delivery. How can the cost per unit be accurately determined when there is no information given specifically on units per delivery? It is impossible which is why I standardized it and assumed all the deliveries in the month added up to the desired 400 units.
Assuming SSE accepts my recommendations and decides to go with the options I suggested, they would be responsible for various items. Woofer 2 is a FOB destination, freight collect delivery option. This means that when the product reaches the destination, then it is paid for. The buyer pays the freight charge and bears the freight charge while the seller owns the goods while they are in transit. The seller would then file claims after the fact if need be. Tweeter 1 is a FOB destination, freight collect and allow delivery option. This is the same as W2 except the seller eventually bears the freight charge. It is initially paid by the buyer, and then charged to the seller by deducting the necessary amount from the invoice. As with the freight collect, the seller owns the goods during transit and has the ability to file claims.
There are always additional concerns when figuring out the best mode of transportation for the best price. You need to consider the carriers cost; anything vehicle related, fixed operating costs, or specific trip-related costs. Infrastructure is also important; ports, highways, and railroads all play a role in determining transportation. Government regulations and policies may also impact how much or even where you’re allowed to transport your inventory. There are many aspects up and down the supply chain that impact transportation from who wants the product, who is selling the product, what is the product, and where it needs to go.
There was really only one part missing from this case, that being how many units were delivered in one delivery. Without this information, it’s impossible to determine an accurate delivery cost per unit because you don’t even know how many units are arriving. If I had been provided this information I would have been able to give SSE a more accurate recommendation with regards to their delivery options.
There are many companies similar to SSE in their commitment to quality of sound. I think it’s fair to say that Bose is atop that list. They have been leading the industry ever since I can remember and for good reason. Just take a look at their new outdoor Free Space 51 environmental speakers. Equipped with 360 degrees sound coverage, in or above ground installation, and the ability to withstand snow, rain, salt, or ice. Its dedication to success like this that puts Bose at the top of the speaker distributors in the world.

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