Eagle Electric Repair is a repair facility for several major electric appliance manufacturers. Eagle wants to find a low-cost supplier for an electric relay switch used in many appliances. The annual requirements for the relay switch (D) are 100,000 units. Eagle operates 250 days a year. The following data are available for two suppliers, Kramer and Sunrise, for the part: Supplier Freight CostsShipping Quantity (Q ) Price/Unit (p) Carrying Cost/Unit (H ) Lead Time (L) (days) Administrative Costs 2,000 10,000 Kramer $30,000 $20,000 $5.00 $1.00 5 $10,000 Sunrise $28,000 $18,000 $4.90 $0.98 9 $11,000 Which supplier will provide the lowest annual total costs?

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ISBN:9781337406659
Author:WINSTON, Wayne L.
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Eagle Electric Repair is a repair facility for several major electric appliance manufacturers. Eagle wants to find a low-cost supplier for an electric relay switch used in many appliances. The annual requirements for the relay switch (D) are 100,000 units. Eagle operates 250 days a year. The following data are available for two suppliers, Kramer and Sunrise, for the part:

Supplier Freight Costs
Shipping Quantity (Q )
Price/Unit (p) Carrying Cost/Unit (H ) Lead Time (L) (days) Administrative Costs
2,000 10,000
Kramer $30,000 $20,000 $5.00 $1.00 5 $10,000
Sunrise $28,000 $18,000 $4.90 $0.98 9 $11,000

Which supplier will provide the lowest annual total costs?

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