Discuss the below:
Q: M. P. VanOyen Manufacturing has gone out on bid for a regulator component. Expected demand is 675 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 $4.
|
Allen Mfg.
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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
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 The optimal order quantity is ____ with a total cost of $____