M p vanoyen manufacturing has gone out on bid for a, Ask an Expert

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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 $50, and annual holding cost per unit is $5.

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
1,000+	15.00	800+	15.10

a) What is the economic order quantity?

b) Which supplier should be used? Why?

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

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M92169259

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