QUESTION 2 Saturn Ltd is undertaking an analysis of supplier costs to evaluate the relative costs and performance of each supplier. For 2022, they have isolated a range of activities that

are consumed by suppliers, identified activity drivers, and estimated the cost per unit of activity driver. Activity Order Material Receive order Inspect order Return material to supplier Pay supplier Dispute invoice amount Activity Order Material Cost per unit of activity driver In 2022, the three major suppliers to the company consumed the following number of activities: £115.00 per order £155.00 per delivery £160.00 per delivery £145.00 per return £95.00 per invoice £280.00 per dispute AND Titan Ltd Rhea Ltd 40 40 40 Receive order Inspect order Return material to supplier Pay supplier Dispute invoice amount The cost of material purchase from each supplier during 2022 was as follows: Titan Ltd £150,000 Rhea Ltd £105,000 £100,000 Phoebe Ltd Required: a) Calculate the total cost of ownership for each of the three suppliers. [17 MARKS] 8 56 65 65 8 56 0 20 2 Phoebe Ltd 54 60 60 9 22 AND b) Determine the supplier performance index for each supplier. [3 MARKS] c) Discuss the relative performance of each supplier and make a recommendation on supplier selection.