Can you assist me with homework chapter 16 question 12. I am having a difficult time understanding. Thank you ### Educational Content: Supplier Selection and Cost Analysis#### Scenario OverviewThe task involves selecting a supplier for engine parts needed for assembling five different models of a motor scooter sold in specialty stores across the United States. Each model uses the same engine type. The company mandates engine orders in lots of 1,000 due to warehouse and administrative constraints. Special tooling, covered by the supplier, is required due to unique engine characteristics. Two suppliers have provided quotes, and considerations for freight rates and order costs must be evaluated.#### Data Collection**Annual Requirements and Costs:**- **Annual Demand:** 12,000 units- **Engine Weight:** 22 pounds- **Order Processing Cost:** $125 per order- **Inventory Carry Cost:** 20% of the average value of inventory per year**Supplier Quotes:**1. **Supplier 1:** - Unit Price: - 1 to 1,499 units/order: $510.00 - 1,500 to 2,999 units/order: $500.00 - 3,000+ units/order: $490.00 - Tooling Costs: $22,000 - Distance: 125 miles2. **Supplier 2:** - Unit Price: - 1 to 1,499 units/order: $505.00 - 1,500 to 2,999 units/order: $505.00 - 3,000+ units/order: $488.00 - Tooling Costs: $20,000 - Distance: 100 miles**Freight Rates:**- **Truckload:** $0.80 per ton-mile- **Less-than-truckload:** $1.20 per ton-mile*Note: One ton is equivalent to 2,000 pounds. Distances are used to calculate shipping costs.*#### Questions for Analysis**a. Total Cost of Ownership Analysis:** - Calculate the total cost, including unit price, tooling costs, and freight, to determine the most economical supplier.**b. Economic Sense of Truckload Orders:** - Assess if ordering full truckloads is cost-effective. - Determine if supplier choice would change based on truckload orders due to potential discounts or reduced transportation costs.Decision-making will rely heavily on comparing total costs associated with each supplier, factoring in unit prices, tooling, and transportation expenses

The total cost of ownership refers to the total cost incurred in the procurement of the products, use of the products, and disposal of products. The order size is 1000 units. Each engine has a weight of 22 pounds, so the total truckload will be 22,000 lb. This is less than the truckload. So the freight rates will be applicable accordingly. Annual ordering cost = Annual RequirementLot size×Order Processing cost Annual Inventory carrying cost = Average inventory×Price×0.2 Purchase cost = Annual Requirement×Unit price Transportation cost = Annual requirement×Weight per engine×distance×less than truck load freight rates2000 Note that the weight per engine is in pounds, so the total weight will be in pounds. Freight rates are based on ton-mile, so to convert the pound-mile to the ton-mile, the cost is divided by 2000. per ton-mile = 2000 lb per mile is given in the question. The calculations using the above formulae are shown in excel as follows. The total costs will be as follows. Select supplier 2 as it has a lower annual cost.In the case of a full truckload, the lot size is determined, as follows. Lot size=Full truck load weightWeight per engine With a lot size(Order quantity) of 1818 units, the unit price will be 500 for supplier 1 and 505 for supplier 2. The freight rate will be 0.80 per ton mile. The output will be as follows. Select supplier 1 as it has a lower annual cost. With a full truckload quantity, the supplier selection will change.