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Emery Pharmaceutical uses an unstable chemical compound that must be kept in an environment where both temperature and humidity can be controlled. Emery uses 800 pounds per month of the chemical, estimates the holding cost to be 50% of the purchase price (because of spoilage), and estimates order costs to be $53 per order. The cost schedules of two supplier: are as follows: Vendor 1 Vendor 2 Quantity Price/lb Quantity Price/lb 1-499 $17.00 1-399 $17.10 500-999 $16.75 400-799 $16.85 800-1,199 1,200+ 1,000+ $16.50 $16.60 $16.25 Vendor 1 Vendor 2 Price Range Quantity Upper Quantity Price/lb $17.10 Price Range Lower Quantity Upper Quantity Price/lb Lower 1 1 499 1 399 $17.00 $16.75 2 500 999 2 400 799 $16.85 3 1,000 999999 $16.50 800 1,199 $16.60 1,200 999999 $16.25 a.What is the economic order quantity for each supplier? For Vendor 1 at $17.00/pound, the economic order quantity is For Vendor 2 at $17.00/pound, the economic order quantity is units. (round your response to the nearest whole number). units. (round your response to the nearest whole number). b. What quantity should be ordered and which supplier should be used? Therefore the best option is to place the order with for an order size of units. c. The total cost for the most economic order size is (round your response to the nearest whole number).

Emery Pharmaceutical uses an unstable chemical compound that must be kept in an environment where both temperature and humidity can be controlled. Emery uses 800 pounds per month of the chemical, estimates the holding cost to be 50% of the purchase price (because of spoilage), and estimates order costs to be $53 per order. The cost schedules of two supplier: are as follows: Vendor 1 Vendor 2 Quantity Price/lb Quantity Price/lb 1-499 $17.00 1-399 $17.10 500-999 $16.75 400-799 $16.85 800-1,199 1,200+ 1,000+ $16.50 $16.60 $16.25 Vendor 1 Vendor 2 Price Range Quantity Upper Quantity Price/lb $17.10 Price Range Lower Quantity Upper Quantity Price/lb Lower 1 1 499 1 399 $17.00 $16.75 2 500 999 2 400 799 $16.85 3 1,000 999999 $16.50 800 1,199 $16.60 1,200 999999 $16.25 a.What is the economic order quantity for each supplier? For Vendor 1 at $17.00/pound, the economic order quantity is For Vendor 2 at $17.00/pound, the economic order quantity is units. (round your response to the nearest whole number). units. (round your response to the nearest whole number). b. What quantity should be ordered and which supplier should be used? Therefore the best option is to place the order with for an order size of units. c. The total cost for the most economic order size is (round your response to the nearest whole number).

Purchasing and Supply Chain Management
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
Chapter16: Lean Supply Chain Management
Section: Chapter Questions
Problem 10DQ: The chapter presented various approaches for the control of inventory investment. Discuss three...
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Question 2, Problem 12

Emery Pharmaceutical uses an unstable chemical compound that must be kept in an environment where both temperature and humidity can be controlled. Emery uses 800 pounds per month of the chemical, estimates the holding cost to be 50% of the purchase price (because of spoilage), and estimates order costs to be $53 per order. The cost schedules of two suppliers are as follows: Vendor 1 Vendor 2 Quantity Price/lb Quantity Price/lb 1-499 $17.00 1-399 $17.10 500-999 $16.75 400-799 $16.85 $16.50 800-1,199 $16.60 $16.25 1,000+ 1,200+ Vendor 2 Vendor 1 Quantity Upper Quantity Price/lb $17.10 Price Range Lower Quantity Upper Quantity Price/lb Price Range Lower 1 1 499 $17.00 1 1 399 2 500 999 $16.75 400 799 $16.85 3 1,000 999999 $16.50 800 1,199 $16.60 4 1,200 999999 $16.25 a.What is the economic order quantity for each supplier? For Vendor 1 at $17.00/pound, the economic order quantity is For Vendor 2 at $17.00/pound, the economic order quantity is units. (round your response to the nearest whole number). units. (round your response to the nearest whole number). b. What quantity should be ordered and which supplier should be used? Therefore the best option is to place the order with for an order size of units. c. The total cost for the most economic order size is (round your response to the nearest whole number).
Transcribed Image Text:Emery Pharmaceutical uses an unstable chemical compound that must be kept in an environment where both temperature and humidity can be controlled. Emery uses 800 pounds per month of the chemical, estimates the holding cost to be 50% of the purchase price (because of spoilage), and estimates order costs to be $53 per order. The cost schedules of two suppliers are as follows: Vendor 1 Vendor 2 Quantity Price/lb Quantity Price/lb 1-499 $17.00 1-399 $17.10 500-999 $16.75 400-799 $16.85 $16.50 800-1,199 $16.60 $16.25 1,000+ 1,200+ Vendor 2 Vendor 1 Quantity Upper Quantity Price/lb $17.10 Price Range Lower Quantity Upper Quantity Price/lb Price Range Lower 1 1 499 $17.00 1 1 399 2 500 999 $16.75 400 799 $16.85 3 1,000 999999 $16.50 800 1,199 $16.60 4 1,200 999999 $16.25 a.What is the economic order quantity for each supplier? For Vendor 1 at $17.00/pound, the economic order quantity is For Vendor 2 at $17.00/pound, the economic order quantity is units. (round your response to the nearest whole number). units. (round your response to the nearest whole number). b. What quantity should be ordered and which supplier should be used? Therefore the best option is to place the order with for an order size of units. c. The total cost for the most economic order size is (round your response to the nearest whole number).
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