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$22,500 22.700 22,300 |go to one of the company's two warehouses. In add

$22,500 22.700 22,300 |go to one of the company's two warehouses. In add

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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6.5. The Audiofile Company produces boomboxes. However, management has decided to subcontract out the production of the speakers needed for the boomboxes. Three vendors are available to supply the speakers. Their price for Page 232 each shipment of 1,000 speakers is shown below. Vendor Price 1 $22,500 2 22,700 3 22,300 Each shipment would go to one of the company's two warehouses. In addition to the price for each shipment, each vendor would charge a shipping cost for which it has its own formula based on the mileage to the warehouse. These formulas and the mileage data are shown below. Vendor Charge per Shipment Warehouse 1 Warehouse 2 1 $300 + 40¢/mile 1,600 miles 400 miles 2 $200 + 50¢/mile 500 miles 600 miles 3 $500 + 20¢/mile 2,000 miles 1,000 miles Whenever one of the company's two factories needs a shipment of speakers to assemble into the boomboxes, the company hires a trucker to bring the shipment in from one of the warehouses. The cost per shipment is given next, along with the number of shipments needed per month at each factory. Unit Shipping Cost Factory 1 Factory 2 Warehouse 1 $200 $700 Warehouse 2 400 500 Monthly demand 10 6 Each vendor is able to supply as many as 10 shipments per month. However, because of shipping limitations, each vendor is only able to send a maximum of six shipments per month to each warehouse. Similarly, each warehouse is only able to send a maximum of six shipments per month to each factory. Management now wants to develop a plan for each month regarding how many shipments (if any) to order from each vendor, how many of those shipments should go to each warehouse, and then how many shipments each warehouse should send to each factory. The objective is to minimize the sum of the purchase costs (including the shipping charge) and the shipping costs from the warehouses to the factories. c. Formulate and solve a spreadsheet model for the company's problem.
Transcribed Image Text:6.5. The Audiofile Company produces boomboxes. However, management has decided to subcontract out the production of the speakers needed for the boomboxes. Three vendors are available to supply the speakers. Their price for Page 232 each shipment of 1,000 speakers is shown below. Vendor Price 1 $22,500 2 22,700 3 22,300 Each shipment would go to one of the company's two warehouses. In addition to the price for each shipment, each vendor would charge a shipping cost for which it has its own formula based on the mileage to the warehouse. These formulas and the mileage data are shown below. Vendor Charge per Shipment Warehouse 1 Warehouse 2 1 $300 + 40¢/mile 1,600 miles 400 miles 2 $200 + 50¢/mile 500 miles 600 miles 3 $500 + 20¢/mile 2,000 miles 1,000 miles Whenever one of the company's two factories needs a shipment of speakers to assemble into the boomboxes, the company hires a trucker to bring the shipment in from one of the warehouses. The cost per shipment is given next, along with the number of shipments needed per month at each factory. Unit Shipping Cost Factory 1 Factory 2 Warehouse 1 $200 $700 Warehouse 2 400 500 Monthly demand 10 6 Each vendor is able to supply as many as 10 shipments per month. However, because of shipping limitations, each vendor is only able to send a maximum of six shipments per month to each warehouse. Similarly, each warehouse is only able to send a maximum of six shipments per month to each factory. Management now wants to develop a plan for each month regarding how many shipments (if any) to order from each vendor, how many of those shipments should go to each warehouse, and then how many shipments each warehouse should send to each factory. The objective is to minimize the sum of the purchase costs (including the shipping charge) and the shipping costs from the warehouses to the factories. c. Formulate and solve a spreadsheet model for the company's problem.
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