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A manufacturer is sourcing a component for a new product. Expected monthly demand is 705 units. The component can be purchased from either supplier A or supplier B, with the following price breaks: SUPPLIER A SUPPLIER B Quantity Unit Price Quantity Unit Price 1â€“199 $14.00 1â€“149 $14.10 200â€“499 13.80 150â€“349 13.90 500 + 13.6 350 + 13.5 Ordering cost is $31 and annual holding cost is 25 percent of unit price per unit. a. Which supplier should be used? b. What order quantity is optimal if the intent is to minimize total annual costs? c. What is the minimum annual inventory cost?

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M91892596

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