Bradley Solutions and Alexander Limited are two well-established suppliers of inexpensive tools. Weekend Projects is a national chain of retail outlets that caters to the occasional fixer-upper who would prefer to get the job done fast rather than investing in a well-appointed tool box. Weekend Projects wants to find a supplier for a particular tool set that promises to be a big seller. Expected annual sales are 100,000 units (D). Weekend's warehouses operate 50 weeks a year. Management collected data on the two suppliers, which are contained in the table below: Annual Freight Costs Shipping Quantity (Q) Price/Unit Annual Holding Lead Time (L) Cost/Unit (H) $1.43 $1.43 Annual 50,000 Supplier Bradley Alexander 10,000 $40,000 $26,000 $18,000 $30,000 $25,000 $17,000 (d) $7.15 (wks) 5 25,000 Administrative Cost $15,000 $10,000 $7.15 6 a. Which of the two suppliers would provide the lowest annual cost to Weekend Projects? What shipping quantity would you suggest? Using Alexander and a shipping quantity of 10,000 units is the lowest cost alternative, with annual total costs to Weekend Projects of $ 779310 . (Enter your response as an integer.) b. Before management could make a decision, another option became available. Zelda Tools offered the tool set for only $7.00; however, the lead time is longer than the other two suppliers. Zelda is a new supplier and has not been in the industry very long. Additional data for Zelda are in the table below: Annual Freight Costs Shipping Quantity (Q) Supplier Zelda 25,000 $45,000 $27,000 $18,000 Price/Unit Annual Holding Lead Time (L) Annual Administrative (p) $7.00 Cost/Unit (H) $1.40 10,000 50,000 (wks) 7 Cost Management has begun to assess the administrative costs to manage the contract with Zelda. What is the lowest level of administrative costs at which Weekend Projects would be indifferent between using Zelda versus the option you chose in part (a)? Weekend Projects would be indifferent if administrative costs are S (Enter your response as an integer.)

Bradley Solutions and Alexander Limited are two well-established suppliers of inexpensive tools. Weekend Projects is a national chain of retail outlets that caters to the occasional fixer-upper who would prefer to get the job done fast rather than investing in a well-appointed tool box. Weekend Projects wants to find a supplier for a particular tool set that promises to be a big seller. Expected annual sales are 100,000 units (D). Weekend's warehouses operate 50 weeks a year. Management collected data on the two suppliers, which are contained in the table below: Annual Freight Costs Shipping Quantity (Q) Price/Unit Annual Holding Lead Time (L) Cost/Unit (H) $1.43 $1.43 Annual 50,000 Supplier Bradley Alexander 10,000 $40,000 $26,000 $18,000 $30,000 $25,000 $17,000 (d) $7.15 (wks) 5 25,000 Administrative Cost $15,000 $10,000 $7.15 6 a. Which of the two suppliers would provide the lowest annual cost to Weekend Projects? What shipping quantity would you suggest? Using Alexander and a shipping quantity of 10,000 units is the lowest cost alternative, with annual total costs to Weekend Projects of $ 779310 . (Enter your response as an integer.) b. Before management could make a decision, another option became available. Zelda Tools offered the tool set for only $7.00; however, the lead time is longer than the other two suppliers. Zelda is a new supplier and has not been in the industry very long. Additional data for Zelda are in the table below: Annual Freight Costs Shipping Quantity (Q) Supplier Zelda 25,000 $45,000 $27,000 $18,000 Price/Unit Annual Holding Lead Time (L) Annual Administrative (p) $7.00 Cost/Unit (H) $1.40 10,000 50,000 (wks) 7 Cost Management has begun to assess the administrative costs to manage the contract with Zelda. What is the lowest level of administrative costs at which Weekend Projects would be indifferent between using Zelda versus the option you chose in part (a)? Weekend Projects would be indifferent if administrative costs are S (Enter your response as an integer.)

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Chapter2: The Purchasing Process

Section: Chapter Questions

Problem 1GPE

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