Global Trucking Limited Case Study Solution
4. Alternatives
Mr. Charles Dewan has an extraordinary instructive foundation in business controlling. He is an encounter of an inventory network oversight expert and specialization for a very long time. Besides, he has been working in the fulfillment of the checking for more than ten years at Global Trucking Ltd., and the group has expanded the quantity of individual from the buying division as to five during this time.
Mr. Dewan has gotten data by his acquirement group that he has the two organization citations which he needs to think about advantageous and extensive as expressed previously.
He has enquired the Canadian Trucking Alliance as a reference of financial measurements of transport organizations for the working costs interconnected to trucks which intended for similar assurance. The measurable data referenced underneath;
- The Total number of hours/year = 4,800 hours.
- Average drivers salary, S ($/year) = 2 drivers x $5,000 $/month x 12 months/year = $120,000 $/year.
- Average income tax IT (%) = 20%.
- Average fuel cost, f ($/l) = 1.1
- Average planned maintenance cost, CP ($/year) = $15,000.
- Average unplanned maintenance cost, CU = $10,000.
- Average truck purchase price, P ($/truck) = $85,000
On this mention above figure, the total cost of the ownership has to measure
5.Total Cost Of Ownership Approach
The Company needs to consider the full expense of the Ownership approach in light of pressure between staying two merchants who are offering to sell their item. The complete Cost of the Ownership approach drives the organization to settle on the suitable choice for purchasing the truck which is compulsory to come in the affirmation of the venture.
The all out cost of possession way to deal with esteem is a monetary estimation which is projected to assist buyers with closing the immediate and aberrant costs of an item. This technique is studying the idea of the administration bookkeeping which is typically utilizing the full cost accouting.
5.1 The Total Cost Of Ownership For The Vendor No. 1: Volvo
The company is offering the track of the worth of $ 90,000 with usage duration of 5 years which has a depreciation of the $18,000 yearly and the average diesel consumption of the $47,520 per year and average maintenance cost per $ 15,000 and the average unplanned maintenance cost of $ 10,000 annually. The relative cost of the truck is $ 90,520 annually, and it will provide reasonable working durability cost of $ 60,346 annually.
5.2 The Total Cost Of Ownership For The Vendor No. 2: Paccar
The company is offering the track of the worth of $ 80,000 with usage duration of 3 years which has a depreciation of the $26,666 yearly and the regular diesel consumption of the $42,240 per year and average maintenance cost per $ 15,000 and the average unplanned maintenance cost of $ 10,000 annually. The relative cost of the truck is $ 93,907 per year, and it will provide reasonable working durability cost of $ 93,903 per year.
6. Analysis Of The Cost:
Although, the Volvo is offering the high price for the truck that is $90,000, But the truck has the life span of five year approx. It will generate the annual devaluation of $18,000 every year which is quite reasonable as compared to other company. The truck shows the diesel consumption of $18,000 per year which is quite expensive than other competitive company. Although, The average maintenance cost per year is approximately, but the company is showing that the typical working longevity cost of $ 60,346 per year which conveniently justifiable low in front of other Company.
On the other hand, Paccar is offering the low cost that is $80,000, which is almost $10,000 less than other company. The sustainable con for the Paccar is that it has a life span of only three years. The appropriate annual deprecation of the Paccar is $26,666 per year, which seems quite high as compared to another company. This annual depreciation of the Paccar is due to the shorter life span. The average diesel consumption of the truck is $5,280. However, the average maintenance cost per year is same, whereas the company is showing the durability cost of $93,907 per year which is quite high in comparison with other company.
these costs and amounts are showing that Global Trucking Ltd. have to take the consideration with the Volvo Truck Canada to make the order because it is providing the high cost in the of excess of 10,000 dollars, and it will also generate significant amount of providing the regular diesel consumption with the cost of 5280 dollars.It also has life span 5 years which will provide a less yearly depreciation of the truck that is about 18000 dollar in the comaprsion of other company.The company will appreciate the cost saving per year of the amount of $33,561 in the comparison of other company’s truck; this will lead successfully the save of the cost of 100,680 a roundly in a total project which is so mean full for the Company. (see exhibit A)
The Quality of the Paccar and Volvo trucking company
The quality of Volvo trucking company is quite best because the main goal of the Volvo is take the customer consideration. The Volvo always wanted to make the products which will fulfil the customer’s need and has the highest life span. Whereas, the Paccar has the shorter life span of the product s compared to the Volvo but it also has the reasonable marketing quality and services.
On the basis of several competitors, Volvo trucking company has the reasonable and efficient quality products, the expertise and a professional working in Volvo tries their best to make the products to meet the customer requirements.Each operative employ inside of the company will continuously pay attention to their customer and devotedly provide from top to bottom quality of performance.
7.Recommendations
It shows that the both of the company have its own reasonable position and product quality line in the market. The Global trucking company has to take consideration in one of this company by looking at the two basic points which are as follows;
- Check, if the company is considering the cost cutting model to purchase the truck, because in this way it will cut the cost of the business, which is quite beneficial for the increase in company’s annual profit.
- Check, if the company is providing enough luxuries and comfort to their employees.
I would recommend the Global trucking limited company to go for the Volvo’s company truck. Although the Volvo does not provide the enough luxuries and newest technologies, but it has the highest quality products with greater life span. Apart from the product quality Volvo also works on the cost cutting model technique, which ultimately helps the global trucking limited in the increment of company’s annual profit.
Bibliography
Christiaanse, E. (2000). Technology fro supporting supply chain. Journal of Physical Distribution and Logistics Management 30.
Flint, J. (1996). PACCAR Inc. - Company Profile, Information, Business Description, History, Background Information on PACCAR Inc. p. 46.Grones, Alex, P.
Hellstrom, J. (2017). China's Geely turns to Volvo trucks in latest Swedish venture..................
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