Bradley Solutions and Alexander Limited are two well-established suppliers of inexpensive tools. Weekend Projects is a national chain of retail outlets that caters to the occasional fixer-upper who would prefer to get the job done fast rather than investing in a well-appointed tool box. Weekend Projects wants to find a supplier for a particular tool set that promises to be a big seller. Expected annual sales are 100,000 units (D). Weekend's warehouses operate 50 weeks a year. Management collected data on the two suppliers, which are contained in the table below: Annual Freight Costs Shipping Quantity (Q) Price/Unit Annual Holding Lead Time (L) Cost/Unit (H) $1.43 $1.43 Annual 50,000 Supplier Bradley Alexander 10,000 $40,000 $26,000 $18,000 $30,000 $25,000 $17,000 (d) $7.15 (wks) 5 25,000 Administrative Cost $15,000 $10,000 $7.15 6 a. Which of the two suppliers would provide the lowest annual cost to Weekend Projects? What shipping quantity would you suggest? Using Alexander and a shipping quantity of 10,000 units is the lowest cost alternative, with annual total costs to Weekend Projects of $ 779310 . (Enter your response as an integer.) b. Before management could make a decision, another option became available. Zelda Tools offered the tool set for only $7.00; however, the lead time is longer than the other two suppliers. Zelda is a new supplier and has not been in the industry very long. Additional data for Zelda are in the table below: Annual Freight Costs Shipping Quantity (Q) Supplier Zelda 25,000 $45,000 $27,000 $18,000 Price/Unit Annual Holding Lead Time (L) Annual Administrative (p) $7.00 Cost/Unit (H) $1.40 10,000 50,000 (wks) 7 Cost Management has begun to assess the administrative costs to manage the contract with Zelda. What is the lowest level of administrative costs at which Weekend Projects would be indifferent between using Zelda versus the option you chose in part (a)? Weekend Projects would be indifferent if administrative costs are S (Enter your response as an integer.)
Bradley Solutions and Alexander Limited are two well-established suppliers of inexpensive tools. Weekend Projects is a national chain of retail outlets that caters to the occasional fixer-upper who would prefer to get the job done fast rather than investing in a well-appointed tool box. Weekend Projects wants to find a supplier for a particular tool set that promises to be a big seller. Expected annual sales are 100,000 units (D). Weekend's warehouses operate 50 weeks a year. Management collected data on the two suppliers, which are contained in the table below: Annual Freight Costs Shipping Quantity (Q) Price/Unit Annual Holding Lead Time (L) Cost/Unit (H) $1.43 $1.43 Annual 50,000 Supplier Bradley Alexander 10,000 $40,000 $26,000 $18,000 $30,000 $25,000 $17,000 (d) $7.15 (wks) 5 25,000 Administrative Cost $15,000 $10,000 $7.15 6 a. Which of the two suppliers would provide the lowest annual cost to Weekend Projects? What shipping quantity would you suggest? Using Alexander and a shipping quantity of 10,000 units is the lowest cost alternative, with annual total costs to Weekend Projects of $ 779310 . (Enter your response as an integer.) b. Before management could make a decision, another option became available. Zelda Tools offered the tool set for only $7.00; however, the lead time is longer than the other two suppliers. Zelda is a new supplier and has not been in the industry very long. Additional data for Zelda are in the table below: Annual Freight Costs Shipping Quantity (Q) Supplier Zelda 25,000 $45,000 $27,000 $18,000 Price/Unit Annual Holding Lead Time (L) Annual Administrative (p) $7.00 Cost/Unit (H) $1.40 10,000 50,000 (wks) 7 Cost Management has begun to assess the administrative costs to manage the contract with Zelda. What is the lowest level of administrative costs at which Weekend Projects would be indifferent between using Zelda versus the option you chose in part (a)? Weekend Projects would be indifferent if administrative costs are S (Enter your response as an integer.)
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...
Related questions
Question
Transcribed Image Text:Bradley Solutions and Alexander Limited are two well-established suppliers of inexpensive tools. Weekend Projects is a national chain of retail outlets that caters to
the occasional fixer-upper who would prefer to get the job done fast rather than investing in a well-appointed tool box. Weekend Projects wants to find a supplier for
a particular tool set that promises to be a big seller. Expected annual sales are 100,000 units (D). Weekend's warehouses operate 50 weeks a year. Management
collected data on the two suppliers, which are contained in the table below:
Annual Freight Costs
Shipping Quantity (Q)
Price/Unit Annual Holding Lead Time (L)
Cost/Unit (H)
$1.43
$1.43
Annual
Supplier
Bradley
10,000
$40,000
50,000
$18,000
$25,000 $17,000
25,000
(p)
S7.15
(wks)
Administrative Cost
$26.000
5
$15,000
Alexander
$30,000
S7.15
$10.000
a. Which of the two suppliers would provide the lowest annual cost to Weekend Projects? What shipping quantity would you suggest?
Using Alexander and a shipping quantity of 10,000 units is the lowest cost alternative, with annual total costs to Weekend Projects of $ 779310 . (Enter your
response as an integer.)
b. Before management could make a decision, another option became available. Zelda Tools offered the tool set for only $7.00; however, the lead time is longer
than the other two suppliers. Zelda is
new supplier and has not been in the industry very long. Additional data for Zelda are in the table below:
Annual Freight Costs
Shipping Quantity (Q)
Supplier
Zelda
10,000
$45,000
25,000
$27.000
50,000
$18,000
Price/Unit Annual Holding Lead Time (L) Annual Administrative
()
$7.00
Cost/Unit (H)
(wks)
Cost
$1.40
7
Management has begun to assess the administrative costs to manage the contract with Zelda. What is the lowest level of administrative costs at which Weekend
Projects would be indifferent between using Zelda versus the option you chose in part (a)?
Weekend Projects would be indifferent if administrative costs are S (Enter your response as an integer.)
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 5 images
Recommended textbooks for you
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,
Operations Management
Operations Management
ISBN:
9781259667473
Author:
William J Stevenson
Publisher:
McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi…
Operations Management
ISBN:
9781259666100
Author:
F. Robert Jacobs, Richard B Chase
Publisher:
McGraw-Hill Education
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,
Operations Management
Operations Management
ISBN:
9781259667473
Author:
William J Stevenson
Publisher:
McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi…
Operations Management
ISBN:
9781259666100
Author:
F. Robert Jacobs, Richard B Chase
Publisher:
McGraw-Hill Education
Purchasing and Supply Chain Management
Operations Management
ISBN:
9781285869681
Author:
Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:
Cengage Learning
Production and Operations Analysis, Seventh Editi…
Operations Management
ISBN:
9781478623069
Author:
Steven Nahmias, Tava Lennon Olsen
Publisher:
Waveland Press, Inc.