We need 15000 units per year. Two suppliers for those units have provided us their quotes. The order cost is $100 per order and holding cost is $10 per unit per month.
Quantity to order Supplier 1 Supplier 2
1-499 $55 $53
500-999 $50 $52
1000 and more $46 $47
a) What is the economic order quantity?
b) Which supplier to purchase from? Why?
c) What is the optimum order quantity and total annual cost?