Pleas answer the question. **Bell Computers' Integrated Chip Purchase Strategy**Bell Computers purchases integrated chips at an initial price of $350 per chip. The holding cost is $36 per unit per year, and the ordering cost is $118 per order. The company maintains consistent sales, selling 405 units each month. To encourage larger purchases, their supplier, Rich Blue Chip Manufacturing, Inc., has introduced a tiered price structure:**Rich Blue Chip's Price Structure**| Quantity Purchased | Price/Unit ||--------------------|------------|| 1-99 units | $350 || 100-199 units | $325 || 200 or more units | $300 |**Optimization Problem**To determine the most cost-effective purchasing strategy, consider the following:a) Identify the optimal order quantity and calculate the minimum annual cost for Bell Computers to order, purchase, and hold the integrated chips.- **Optimal Order Quantity:** Calculate the quantity Bell should order to minimize costs based on the new pricing structure. - **Total Annual Cost:** Determine how much Bell Computers will spend annually, incorporating ordering, purchasing, and holding expenses.Fill in the required numbers in the appropriate fields provided:- Optimal order quantity after the pricing structure change: [ ] units- Total annual cost for Bell Computers: $[ ]Please use whole numbers for responses.

Given data Holding cost (H) = $36 Ordering cost (S) = $118 per order Sales are steady at 405 monthly Hence, the annual demand D = 12 × 405 = 4,860 unitsAns a: The optimal order quantity will be calculated by the following method. Economic Order Quantity ( EOQ) =2×D×SH=2×4860×1183631860=178.49=179 units 179 units are falling the range between 100-199 units. Now the total cost of the break-even point that is 200 units and the total cost of the 179 units will be calculated. Total cost = Annual ordering cost +Annual holding cost +Annual purchased cost Total cost 179=DEOQ×S+EOQ2×H+P×D=4860179×118+1792×36+325×4860=3203.8+3222+1579500=$1585925.8=$1585925 Total cost = Annual ordering cost +Annual holding cost +Annual purchased cost Total cost 200=DEOQ×S+EOQ2×H+P×D=4860200×118+2002×36+300×4860=2867.4+3600+1458000=$1464467.4=$1464468 Since the 200 units have the low costs. Hence, the optimal order quantity is 200 units The total annual cost is $1464468

Business

Operations Management

Bell Computers purchases integrated chips at $350 per chip. The holding cost is $36 per unit per year, the ordering cost is $118 per order, and sales are steady at 405 per month. The company's supplier, Rich Blue Chip Manufacturing, Inc., decides to offer price concessions in order to attract larger orders. The price structure is shown below. Rich Blue Chip's Price Structure Quantity Purchased Price/Unit $350 $325 $300 1-99 units 100-199 units 200 or more units a) What is the optimal order quantity and the minimum annual cost for Bell Computers to order, purchase, and hold these integrated chips? The optimal order quantity after the change in pricing structure is units (enter your response as a whole number). The total annual cost for Bell computers to order, purchase, and hold the integrated chips is S |(round your response to the nearest whole number).

Bell Computers purchases integrated chips at $350 per chip. The holding cost is $36 per unit per year, the ordering cost is $118 per order, and sales are steady at 405 per month. The company's supplier, Rich Blue Chip Manufacturing, Inc., decides to offer price concessions in order to attract larger orders. The price structure is shown below. Rich Blue Chip's Price Structure Quantity Purchased Price/Unit $350 $325 $300 1-99 units 100-199 units 200 or more units a) What is the optimal order quantity and the minimum annual cost for Bell Computers to order, purchase, and hold these integrated chips? The optimal order quantity after the change in pricing structure is units (enter your response as a whole number). The total annual cost for Bell computers to order, purchase, and hold the integrated chips is S |(round your response to the nearest whole number).

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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