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Requirements (annual forecast) Weight per engine Order processing cost Inventory carry cost 16,200 units 25 pounds $ 150 per order 20 percent of the average value of inventory per Note: Assume that half of lot size is in inventory on average (1,350/2 = 675 units). Two qualified suppliers have submitted the following quotations: ORDER QUANTITY 1 to 1,499 units/order 3,000 + units/order Tooling costs Distance SUPPLIER 1 UNIT PRICE SUPPLIER 2 UNIT PRICE $ 590 $ 588 1,500 to 2,999 units/order 586 588 584 582 $27,500 $23,800 120 miles 100 miles Your assistant has obtained the following freight rates from your carrier: Truckload (40,000 lbs. each load): Less-than-truckload: $0.80 per ton-mile $1.20 per ton-mile Note: Per ton-mile = 2,000 lbs. per mile. Your company assembles five different models of a motor scooter that is sold in specialty stores in the United States. The company uses the same engine for all five models. You have been given the assignment of choosing a supplier for these engines for the coming year. Due to the size of your warehouse and other administrative restrictions, you must order the engines in lot sizes of 1,350 units. Because of the unique characteristics of the engine, special tooling is needed during the manufacturing process for which you agree to reimburse the supplier. Your assistant has obtained quotes from two reliable engine suppliers and you need to decide which to use. The following data have been collected: Requirements (annual forecast) 16,200 units Weight per engine Order processing cost Inventory carry cost 25 pounds $ 150 per order 20 percent of the average value of inventory per year Note: Assume that half of lot size is in inventory on average (1,350/2 = 675 units). Two qualified suppliers have submitted the following quotations: ORDER QUANTITY 1 to 1,499 units/order 1,500 to 2,999 units/order 3,000+ units/order Tooling costs Distance SUPPLIER 1 SUPPLIER 2 UNIT PRICE UNIT PRICE $ 590 $ 588 586 588 584 582 $27,500 $23,800 120 miles 100 miles Your assistant has obtained the following freight rates from your carrier: Truckload (40,000 lbs. each load): Less-than-truckload: $0.80 per ton-mile $1.20 per ton-mile

Requirements (annual forecast) Weight per engine Order processing cost Inventory carry cost 16,200 units 25 pounds $ 150 per order 20 percent of the average value of inventory per Note: Assume that half of lot size is in inventory on average (1,350/2 = 675 units). Two qualified suppliers have submitted the following quotations: ORDER QUANTITY 1 to 1,499 units/order 3,000 + units/order Tooling costs Distance SUPPLIER 1 UNIT PRICE SUPPLIER 2 UNIT PRICE $ 590 $ 588 1,500 to 2,999 units/order 586 588 584 582 $27,500 $23,800 120 miles 100 miles Your assistant has obtained the following freight rates from your carrier: Truckload (40,000 lbs. each load): Less-than-truckload: $0.80 per ton-mile $1.20 per ton-mile Note: Per ton-mile = 2,000 lbs. per mile. Your company assembles five different models of a motor scooter that is sold in specialty stores in the United States. The company uses the same engine for all five models. You have been given the assignment of choosing a supplier for these engines for the coming year. Due to the size of your warehouse and other administrative restrictions, you must order the engines in lot sizes of 1,350 units. Because of the unique characteristics of the engine, special tooling is needed during the manufacturing process for which you agree to reimburse the supplier. Your assistant has obtained quotes from two reliable engine suppliers and you need to decide which to use. The following data have been collected: Requirements (annual forecast) 16,200 units Weight per engine Order processing cost Inventory carry cost 25 pounds $ 150 per order 20 percent of the average value of inventory per year Note: Assume that half of lot size is in inventory on average (1,350/2 = 675 units). Two qualified suppliers have submitted the following quotations: ORDER QUANTITY 1 to 1,499 units/order 1,500 to 2,999 units/order 3,000+ units/order Tooling costs Distance SUPPLIER 1 SUPPLIER 2 UNIT PRICE UNIT PRICE $ 590 $ 588 586 588 584 582 $27,500 $23,800 120 miles 100 miles Your assistant has obtained the following freight rates from your carrier: Truckload (40,000 lbs. each load): Less-than-truckload: $0.80 per ton-mile $1.20 per ton-mile

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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A. Calculate the total cost for each supplier. B. Which supplier would you select? C. If you could move the lot size up to ship in truckload quantities, calculate the total cost for each supplier.
Requirements (annual forecast) Weight per engine Order processing cost Inventory carry cost 16,200 units 25 pounds $ 150 per order 20 percent of the average value of inventory per Note: Assume that half of lot size is in inventory on average (1,350/2 = 675 units). Two qualified suppliers have submitted the following quotations: ORDER QUANTITY 1 to 1,499 units/order 3,000 + units/order Tooling costs Distance SUPPLIER 1 UNIT PRICE SUPPLIER 2 UNIT PRICE $ 590 $ 588 1,500 to 2,999 units/order 586 588 584 582 $27,500 $23,800 120 miles 100 miles Your assistant has obtained the following freight rates from your carrier: Truckload (40,000 lbs. each load): Less-than-truckload: $0.80 per ton-mile $1.20 per ton-mile Note: Per ton-mile = 2,000 lbs. per mile.
Transcribed Image Text:Requirements (annual forecast) Weight per engine Order processing cost Inventory carry cost 16,200 units 25 pounds $ 150 per order 20 percent of the average value of inventory per Note: Assume that half of lot size is in inventory on average (1,350/2 = 675 units). Two qualified suppliers have submitted the following quotations: ORDER QUANTITY 1 to 1,499 units/order 3,000 + units/order Tooling costs Distance SUPPLIER 1 UNIT PRICE SUPPLIER 2 UNIT PRICE $ 590 $ 588 1,500 to 2,999 units/order 586 588 584 582 $27,500 $23,800 120 miles 100 miles Your assistant has obtained the following freight rates from your carrier: Truckload (40,000 lbs. each load): Less-than-truckload: $0.80 per ton-mile $1.20 per ton-mile Note: Per ton-mile = 2,000 lbs. per mile.
Your company assembles five different models of a motor scooter that is sold in specialty stores in the United States. The company uses the same engine for all five models. You have been given the assignment of choosing a supplier for these engines for the coming year. Due to the size of your warehouse and other administrative restrictions, you must order the engines in lot sizes of 1,350 units. Because of the unique characteristics of the engine, special tooling is needed during the manufacturing process for which you agree to reimburse the supplier. Your assistant has obtained quotes from two reliable engine suppliers and you need to decide which to use. The following data have been collected: Requirements (annual forecast) 16,200 units Weight per engine Order processing cost Inventory carry cost 25 pounds $ 150 per order 20 percent of the average value of inventory per year Note: Assume that half of lot size is in inventory on average (1,350/2 = 675 units). Two qualified suppliers have submitted the following quotations: ORDER QUANTITY 1 to 1,499 units/order 1,500 to 2,999 units/order 3,000+ units/order Tooling costs Distance SUPPLIER 1 SUPPLIER 2 UNIT PRICE UNIT PRICE $ 590 $ 588 586 588 584 582 $27,500 $23,800 120 miles 100 miles Your assistant has obtained the following freight rates from your carrier: Truckload (40,000 lbs. each load): Less-than-truckload: $0.80 per ton-mile $1.20 per ton-mile
Transcribed Image Text:Your company assembles five different models of a motor scooter that is sold in specialty stores in the United States. The company uses the same engine for all five models. You have been given the assignment of choosing a supplier for these engines for the coming year. Due to the size of your warehouse and other administrative restrictions, you must order the engines in lot sizes of 1,350 units. Because of the unique characteristics of the engine, special tooling is needed during the manufacturing process for which you agree to reimburse the supplier. Your assistant has obtained quotes from two reliable engine suppliers and you need to decide which to use. The following data have been collected: Requirements (annual forecast) 16,200 units Weight per engine Order processing cost Inventory carry cost 25 pounds $ 150 per order 20 percent of the average value of inventory per year Note: Assume that half of lot size is in inventory on average (1,350/2 = 675 units). Two qualified suppliers have submitted the following quotations: ORDER QUANTITY 1 to 1,499 units/order 1,500 to 2,999 units/order 3,000+ units/order Tooling costs Distance SUPPLIER 1 SUPPLIER 2 UNIT PRICE UNIT PRICE $ 590 $ 588 586 588 584 582 $27,500 $23,800 120 miles 100 miles Your assistant has obtained the following freight rates from your carrier: Truckload (40,000 lbs. each load): Less-than-truckload: $0.80 per ton-mile $1.20 per ton-mile
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