M. P. VanOyen Manufacturing has gone out on bid for a regulator component. Expected demand is 700 units per month. The item can be purchased from either Allen Manufacturing or Baker Manufacturing. Their price lists are shown in the table. Ordering cost is $45, and annual holding cost per unit is $7. Allen Mfg. Baker Mfg. Quantity Unit Price Quantity Unit Price 1-499 $16.00 1-399 $16.10 500-999 15.50 400-799 15.60 1000+ 15.00 800+ 15.10 a) What is the economic order quantity if price is not aconsideration? (round your response to the nearest whole number). b) Which supplier, based on all options with regard todiscounts, should be used? c) What is the optimal order quantity and total annual cost ofordering, purchasing, and holding the component?
M. P. VanOyen Manufacturing has gone out on bid for a regulator component. Expected demand is 700 units per month. The item can be purchased from either Allen Manufacturing or Baker Manufacturing. Their price lists are shown in the table. Ordering cost is $45, and annual holding cost per unit is $7.
|
Allen Mfg. |
|
Baker Mfg. | |
|
Quantity |
Unit Price |
Quantity |
Unit Price |
|
1-499 |
$16.00 |
1-399 |
$16.10 |
|
500-999 |
15.50 |
400-799 |
15.60 |
|
1000+ |
15.00 |
800+ |
15.10 |
a) What is the economic order quantity if price is not aconsideration? (round your response to the nearest whole number).
b) Which supplier, based on all options with regard todiscounts, should be used?
c) What is the optimal order quantity and total annual cost ofordering, purchasing, and holding the component?
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