ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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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 a​consideration? ​(round your response to the nearest whole​ number).

​b) Which​ supplier, based on all options with regard to​discounts, should be​ used?

​c) What is the optimal order quantity and total annual cost of​ordering, purchasing, and holding the​ component?

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