A purchasing agent for a particular type of silicon wafer used in the production ofsemiconductors must decide among three sources. Source A will sell the siliconwafers for $2.50 per wafer, independently of the number of wafers ordered. Source Bwill sell the wafers for $2.40 each but will not consider an order for fewer than3,000 wafers, and Source C will sell the wafers for $2.30 each but will not acceptan order for fewer than 4,000 wafers. Assume an order setup cost of $100 and anannual requirement of 20,000 wafers. Assume a 20 percent annual interest rate forholding cost calculations.a. Which source should be used, and what is the size of the standing order?
A purchasing agent for a particular type of silicon wafer used in the production ofsemiconductors must decide among three sources. Source A will sell the siliconwafers for $2.50 per wafer, independently of the number of wafers ordered. Source Bwill sell the wafers for $2.40 each but will not consider an order for fewer than3,000 wafers, and Source C will sell the wafers for $2.30 each but will not acceptan order for fewer than 4,000 wafers. Assume an order setup cost of $100 and anannual requirement of 20,000 wafers. Assume a 20 percent annual interest rate forholding cost calculations.a. Which source should be used, and what is the size of the standing order?
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
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A purchasing agent for a particular type of silicon wafer used in the production of
semiconductors must decide among three sources. Source A will sell the silicon
wafers for $2.50 per wafer, independently of the number of wafers ordered. Source B
will sell the wafers for $2.40 each but will not consider an order for fewer than
3,000 wafers, and Source C will sell the wafers for $2.30 each but will not accept
an order for fewer than 4,000 wafers. Assume an order setup cost of $100 and an
annual requirement of 20,000 wafers. Assume a 20 percent annual interest rate for
holding cost calculations.
a. Which source should be used, and what is the size of the standing order?
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