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Emery Pharmaceutical uses an unstable chemical compound that must be kept in an environment where both temperature and humidity can be controlled. Emery uses 200 pounds per month of the chemical, estimates the holding cost to be £3.33 (because of spoilage), and estimates order costs to be £10 per order. The cost schedules of four suppliers are as follows: SEE PHOTO ATTACHED: What quantity should be ordered, and which supplier should be used?

Emery Pharmaceutical uses an unstable chemical compound that must be kept in an environment where both temperature and humidity can be controlled. Emery uses 200 pounds per month of the chemical, estimates the holding cost to be £3.33 (because of spoilage), and estimates order costs to be £10 per order. The cost schedules of four suppliers are as follows: SEE PHOTO ATTACHED: What quantity should be ordered, and which supplier should be used?

Practical Management Science
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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Emery Pharmaceutical uses an unstable chemical compound that must be kept in an environment where both
temperature and humidity can be controlled. Emery uses 200 pounds per month of the chemical, estimates the holding
cost to be £3.33 (because of spoilage), and estimates order costs to be £10 per order. The cost schedules of four suppliers are as follows:

SEE PHOTO ATTACHED:

What quantity should be ordered, and which supplier should be used?

Vendor 1 Vendor 2 Quantity Price/LB (£) Quantity Price/LB (£) 1-49 35.00 1-74 34.75 50-74 34.75 75-149 34.00 75-149 33.55 150-299 32.80 150-299 32.35 300-499 31.60 300-499 31.15 500+ 30.50 500+ 30.75 Vendor 3 Vendor 4 Quantity Price/LB (£) Quantity Price/LB (£) 1-99 34.50 1-199 34.25 100-199 33.75 200-399 33.00 200-399 32.50 400+ 31.00 400+ 31.10
Transcribed Image Text:Vendor 1 Vendor 2 Quantity Price/LB (£) Quantity Price/LB (£) 1-49 35.00 1-74 34.75 50-74 34.75 75-149 34.00 75-149 33.55 150-299 32.80 150-299 32.35 300-499 31.60 300-499 31.15 500+ 30.50 500+ 30.75 Vendor 3 Vendor 4 Quantity Price/LB (£) Quantity Price/LB (£) 1-99 34.50 1-199 34.25 100-199 33.75 200-399 33.00 200-399 32.50 400+ 31.00 400+ 31.10
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