Hello, I need help with this 7 of 8 Zenn Canada Zenn is a Australia automotive m

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Hello, I need help with this 7 of 8 Zenn Canada Zenn is a Australia automotive manufacturer that specializes in family sedans, trucks and SUV's. In 1992 Zenn started Zenn Canada, a wholly owned subsidiary of Zenn Australia. Since 1992, the Zenn brand has become very popular in Canada In 1992, when Zenn first started its operations in Canada, 100% of the manufacturing was in Australia. In 1998, Zenn opened a manufacturing facility in BC. The BC plant would be responsible for manufacturing all of its vehicles for the Canadian market. The majority of the parts are manufactured in-house or outsourced to a third party in Canada. In order to maintain control, Zenn Australia shipped al headlamps to the Canadian subsidiary. Zenn Australia has a very efficient inventory control system and has not normally been involved in the Canadian division in deciding how many headlamps would be shipped to Canada each month. Zenn Australia always ships enough headlamps to Canada every month to ensure that 50% of the next months projected demand is met. Note that each vehicle requires two headlamps. During 2017, Australia suffered from a very significant earthquake that caused severe damage across the country including the destruction of Zenn's manufacturing plant. On December 1, Zenn sent a memo to the Canadian subsidiary informing them that it would not be shipping any more headlamps to Canada for at least six months. On December 2 Zenn Canada's Director of inventory Kieran Didcott called a special emergency meeting to deal with the headlamp issue. At the meeting were the manufacturing manager, Bob Tully, and you, the cost accountant. Kieran has asked that you review the sales forecasts (attached) and determine the monthly amounts of headlamps to purchase and the cash requirements to do so. As soon as the she received the memo Kieran phoned two potential suppliers for quotes (attached) and brought them to you for review Required Kieran has asked you to state which of the suppliers' offers you would recommend and any other potential concerns you may have Write a memo to Kieran and remember that Zenn Canada currently has a limited number of headlamps in inventory. Make sure you address both quantitative and qualitative concerns in making your

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Solution:-

MEMO To : Keiron Didcott, Director of Zenn's Canada From : Bob Tully Date : 15.12.2017 Subject:- Review of potential headlamp supplier's quotes Jan Feb Mar Apr May Jun Headlamp required                                                                               15,600.00    13,000.00    9,000.00 10000    15,000.00    16,400.00 (7800*2) (6500*2) (4500*2) (5000*2) (7500*2) (8200*2) Analysis:- Pros of supplier 1 Quote- Bakers :-High Quality Products :- One year warranty :-Replacement of any defective headlamp and can claim from reimbursment :- 30 days shipment else baker will bear Cons :- Expensive product :-Payment is due on delivery :- Although 20 years of experience but no specialization :-No guarantee only warantee Pros of supplier 2 quote- Lamp Inc :- Cheap price as compared to Bakers :- More Liquidity/Flexibility in payment :- Guarantee of replacing any defective lamp :-15 day delivery Cons: :- Risk of taking chance in 2 year old company :- NO monetary claim file against Lamp INC. :- Guarantee offer is valid for only 3 months Conclusion As we can analyse the above facts and the case that Zenn is more popular company in Canada.
And in December there was severe earthquake in Australia due to which Zenn Australia would not send any haedlamp part to Zenn Canada. Ir seems that there is heavy destruction of company own assets . If we compare the above two supplier's qoutes Supllier 2 LAMP INC Seems to be more reasonable opton as they provide the headlamp at the cheaper rate as compared to BAkers and they are specialized in manufacuring these product. Also, There is payment flexibility found in dealing ith LAMP INc which will assist Zenn in receovery of lossses. ALthough They provide guarantee offer for inly 3 months but if we go the current situation Zenn is not in position to pay for higher price . Zenn has to take risk now in shaking hand with 2 year old company instead of 20 year old.

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