| Course | MT498 Bachelor's Capstone in Supply Chain Management |
|---|---|
| Unit | Unit 7 |
| Paper type | Total landed cost model |
| Length | About 890 words, 6 pages double-spaced |
| Format | APA 7 student paper |
| School | Purdue University Global |
| Program | BS in Business Administration |
| Updated | October 2026 |
Free sample paper for MT498 Unit 7
Nine Rows in the Order Money Leaves: An MT498 Unit 7 Total Landed Cost Model for Lowry Filter's Eastern Case
[Student Name]
Purdue University Global
MT498: Bachelor's Capstone in Supply Chain Management
Unit 7 Total Landed Cost Model
[Instructor Name]
[Date]
Lowry Filter Company and every rate, cost and volume are composite; the sources cited are real.
Assumptions
Every input sits on one assumptions tab with a source or a label. Volume is 396,000 eastern cases a year. The truckload rate is $2.40 a mile from last year's invoices. An outbound trailer holds 1,080 cases, while an inbound media load covers about 5,100 cases before reaching its weight limit. The annual carrying rate is 22 percent, the company's own figure for the cost of capital, storage risk and obsolescence. A short case costs $11.40 in lost contribution and chargebacks, from Unit 4. Conversion at Salina costs $7.42 a case; Ohio's is estimated at $7.87, since wages in the Columbus area run higher and a new crew will take time to reach Salina's productivity. The premium media buffer added after the Unit 6 seminar is included in the carrying row.
The Cost Build
Rows run in the order money leaves the company. Each figure is per eastern case, and the four columns are A, today's network; B, close Columbus and ship from Salina; C, three lines in Groveport, Ohio; and D, the York contract pleater.
1. Purchased materials: 18.40, 18.40, 18.40, 26.95 (the contract price includes materials and conversion).
2. Conversion: 7.42, 7.42, 7.87, none.
3. Inbound freight: 0.50, 0.50, 0.20, none.
4. Duty on premium media: 0.49 in every column.
5. Outbound freight: 3.53, 2.65, 1.64, 2.27.
6. Storage and handling: 0.55, 0.15, 0.57, 0.55.
7. Carrying cost: 0.38, 0.50, 0.20, 0.30.
8. Stranded Salina overhead: none, none, 0.90, 0.90.
9. Stockouts: 1.03, 1.29, 0.33, 0.68.
Totals are $32.30, $31.40, $30.60 and $32.14.
The Row That Decides It
Outbound freight falls by $1.89 a case under Option C, about $748,440 a year, because the 850-mile trailer run from Kansas disappears and eastern filters start their trip a day from their customers. No other row moves nearly as far in either direction. Ballou (2004) observes that for bulky, low-value products, transportation is often the largest controllable cost in the network, and this row confirms it for a product that ships air.
Moving the pleating, not the warehouse, is what removes the trailer run from Kansas.
Costs That Move Against the Saving
Two rows work against Option C and sit in the main table rather than in a footnote. Conversion in Ohio costs 45 cents a case more, about $178,200 a year. And when three of six lines leave Salina, supervision, maintenance and building costs that those lines used to absorb stay behind: about $356,400 a year, or 90 cents on each eastern case. Option D carries the same stranded overhead, since its eastern volume also leaves Salina. Leaving such fixed costs out is a common way for relocation studies to inflate savings (Simchi-Levi et al., 2008), and including them shrinks Option C's first-cut advantage from $1.72 a case to $1.70 only because stockouts and carrying cost move the other way.
Stockouts as a Cost Row
Treating service as money lets the model weigh it against freight directly. Today's 93.1 percent fill rate costs about $407,494 a year in short cases and expedites. Option C's projected 97.6 percent cuts that to about $130,346. Option B's 91.8 percent raises it to about $510,181, which is why closing Columbus shrinks from a first-cut saving of about $506,880 a year to $356,400 once stockouts and the extra stock it must hold at Salina are counted.
Sensitivity
Two inputs are most likely to be wrong, and the sensitivity tab tests both. If truckload rates fall 20 percent, every freight row shrinks, and Option C's advantage drops to about $499,752 a year, still well ahead. If Ohio conversion turns out higher than estimated, the saving disappears only when it passes about $9.57 a case, $2.15 above Salina's. Doubling the stranded overhead still leaves Option C about $316,800 a year ahead. The result holds across reasonable errors in the inputs it depends on most.
What the Model Leaves Out
Three things are outside the per-case figures on purpose. One-time costs sit beside the running cost as a payback, because folding them into a per-case figure would make the answer depend on how many years they are spread over. Demand growth is held flat at 396,000 cases, so that the options are compared on today's volume. And currency movements on imported premium media are ignored, since they affect every option equally. Ellram (1995) recommends that a total cost analysis state its boundaries as plainly as its contents, so that a reader can tell a cost that was examined and found irrelevant from one that was simply missed.
One-Time Cost and Payback
Option C requires about $1,526,800 once: fitting out the Groveport building with power, compressed air and racking, moving and reinstalling three lines, and hiring and training about 38 people. At $673,200 a year, it pays back in about 2.27 years, inside the $2 million capital ceiling. The phasing plan in Unit 9 may add costs the model does not yet include, and any change will be reported rather than absorbed.
References
Ballou, R. H. (2004). Business logistics/supply chain management (5th ed.). Pearson Prentice Hall.
Ellram, L. M. (1995). Total cost of ownership: An analysis approach for purchasing. International Journal of Physical Distribution & Logistics Management, 25(8), 4-23. https://doi.org/10.1108/09600039510099928
Simchi-Levi, D., Kaminsky, P., & Simchi-Levi, E. (2008). Designing and managing the supply chain: Concepts, strategies, and case studies (3rd ed.). McGraw-Hill/Irwin.
The Purdue Global MT498 Unit 7 instructions
The seventh unit of MT498 asks you to total every cost of each option: purchase, freight, duty, storage and carrying cost, plus the rows first-cut models often forget. Start with an assumptions tab that sources or labels every input. Order the rows as money leaves the company and express each per unit, so any total can be traced to one input. Include stockouts as a cost, using the per-unit figure from your problem statement, and include overhead left behind at any site that loses volume. Keep one-time costs outside the per-unit figures and report them as a payback. Test the inputs most likely to be wrong and find where the answer would flip. A narrative explains which row decides the comparison and which rows cut against the winner.
How this MT498 Unit 7 example is built
Lowry's model opens with assumptions: 396,000 cases, a $2.40 truckload rate, trailer and media load sizes, a 22 percent carrying rate, $11.40 per short case and conversion of $7.42 in Salina against $7.87 in Ohio. A nine item list gives each row for all four options and their totals. The decisive outbound freight row is isolated under a highlighted line and explained with Ballou. Two rows that work against Ohio are placed in the main table, with Simchi-Levi and colleagues on stranded fixed costs. A stockout section shows why the warehouse closure shrinks once service is priced. Sensitivity tests freight 20 percent lower, a $9.57 conversion break-even and doubled overhead. Boundaries are stated with Ellram before the one-time cost and payback.
Reading the MT498 Unit 7 grading rubric
Completeness comes before precision when this model is graded. A freight saving shown without the overhead stranded at the old site, or without the higher labor rate at the new one, is the pattern instructors comment on most, since it turns a close result into an easy one. Carrying cost and stockout cost are expected as rows, not footnotes. Every input should be sourced or labeled, and totals should trace back to per-unit figures. One-time costs belong in a payback rather than mixed into the running cost. Testing the two or three shakiest inputs, and reporting the value at which the ranking flips, is rewarded. A clear narrative, consistent figures with earlier units and APA references complete the expected standard.
MT498 Unit 7 help from the desk
The commonest weakness is a model that counts only purchase price and freight, which makes almost any relocation look attractive. Another is leaving stranded overhead out, so the saving from moving work ignores the costs that stay behind. Students frequently forget carrying cost or include it only for one option. Stockouts are often left out because they feel uncertain, though leaving them out values service at zero. Sensitivity analyses sometimes vary inputs that hardly matter while ignoring the one that decides the result. Before submitting, check that every option has every row, that the rows sum to the totals, that one-time costs sit outside the per-unit figures, and that your narrative names the input most likely to change the answer.
Get an MT498 Unit 7 example written to your instructions
Include the options your model compares, every rate, volume and price on file, plus the Unit 7 instructions and rubric. We build a composite landed cost model with every row sourced or bracketed, a sensitivity tab and the break-even that would reverse the answer. The first custom sample costs nothing; 24-48h is typical. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.
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MT498 Unit 7 questions, answered
Does a domestic network redesign need a duty row?
Only if some inputs cross a border. In this sample, premium filter media is imported, so duty appears, but it is identical across the in-house options and drops out of the comparison. Showing it anyway proves the model is complete, and it matters for the contract option, whose pleater buys domestic media and pays none.
What carrying cost rate should the model use?
Your company's own rate if it has one, otherwise a stated assumption. Rates between about fifteen and twenty-five percent a year, applied to the value of stock held, are widely used, covering capital, storage, insurance and obsolescence. The rate matters less than applying it to every stock position in every option: media, finished goods and inventory in transit.
Should one-time costs go into the per-case figure?
Usually they sit outside it, reported as a payback or net present value beside the running cost, because mixing them hides how quickly an option earns back its setup. Some sections prefer amortizing them over a stated period instead. Either approach works if the choice is explicit and applied the same way to every option.
Where can I find a free MT498 Unit 7 sample paper?
This page contains the full MT498 Unit 7 model for a composite filter maker, totaling nine cost rows for four network options with sensitivity tests and payback.
What would flip the result in the MT498 Unit 7 sample?
The Ohio saving disappears only if conversion there passes about $9.57 a case; lower freight rates or doubled stranded overhead still leave it ahead.