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10 Jul 2019
The manager of a large TV store wants to begin stocking a type of remote control device. Expected monthly demand is 800 units. The remote controls can be purchased from either supplier A or supplier B. Their price lists are as follows:
Supplier A
Quantity
Unit price
1-199
$14.00
200-499
$13.80
500+
$13.60
Supplier B
Quantity
Unit price
1-149
$14.10
150-349
$13.90
350+
$13.70
Ordering cost is $40 per order and annual holding cost is 25 percent of unit price. Which supplier should be used and what order quantity is optimal if the intent is to minimize total annual cost?
The manager of a large TV store wants to begin stocking a type of remote control device. Expected monthly demand is 800 units. The remote controls can be purchased from either supplier A or supplier B. Their price lists are as follows:
Supplier A
| Quantity | Unit price |
| 1-199 | $14.00 |
| 200-499 | $13.80 |
| 500+ | $13.60 |
Supplier B
| Quantity | Unit price |
| 1-149 | $14.10 |
| 150-349 | $13.90 |
| 350+ | $13.70 |
Ordering cost is $40 per order and annual holding cost is 25 percent of unit price. Which supplier should be used and what order quantity is optimal if the intent is to minimize total annual cost?
Nelly StrackeLv2
11 Jul 2019