A company will begin stocking remote control devices. Expected monthly demand is 800 units. The controllers can be purchased from either supplier A or supplier B. Their price lists are as follows:
SUPPLIER A SUPPLIER B
Quantity Unit Price Quantity Unit Price
1-199 $14.00 1-149 $14.10
200-499 $13.80 150-349 $13.90
500+ $13.60 350+ $13.70
Ordering cost is $40 and annual holding cost is 25 percent of unit price per unit. Which supplier should be used and what order quantity is optimal if the intent is to minimize total annual costs?