Cost comparison model on total landed cost for purchased items : A case study of an industrial company

The business area wants to remain in a market leading position. To do so being cost efficient is central. Lowering costs in the supply chain and when it comes to purchasing products is one way of optimizing the organization's actions. The business area hasn't developed any model or tool to handle the Total Landed Cost (TLC). The goal with the tool has been to educate the purchasers how to handle these costs and with the study give guidance on how to improve the cost focus within the organization. The company also has an environmental goal of reducing their emissions with 20 % within the next 5 years, the thesis therefore contains an investigation by integer programming about how the business area could be able to achieve this. By making qualitative interviews and using scientific articles as a base the authors constructed a model for TLC. A tool was created for comparing supplier solutions and to visualize the TLC. Connected to the TLC two special cases regarding how to handle transportation and inventory was also executed. The purpose is to encircle adjacent request from the client. The business areas TLC are affected by transportation costs, customs and tariffs but it can be affected by currency and risk parameters as well. The study showed that several investigated costs should be excluded as cost drivers in a TLC perspective