You are a purchasing manager in charge of stocking a certain type of transformer for a large electric utility. weekly demand among your field crews for these transformers is normally distributed, with a mean of 100 and a standard deviation of 50. holding costs are 25 percent and you must hold a level of inventory, to a cycle service level of 95 percent. you are faced with two suppliers, reliable components and value electric that offer the following terms .reliable sells the transformer for $ 5,000 with a minimum order of 100and a lead time of 1 week with a standard deviation 0.1 week .value sells the transformer for $4,800,has a minimum batch of 1000,a lead time of 5 weeks and a lead time standard deviation of 4 weeks .
a. What is the annual cost of using reliable components as a supplier?
b. What is the annual cost using value electric as a supplier?
c. Which supplier would you choose?
d. If u could use both the suppliers, how would u structure your orders?