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: Vendor 1 Vendor 2 Quantity Price/LB (£) Quantity Price/LB (E) 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 (£) 34.50 1-199 34.25 1-99 200-399 33.00 100-199 33.75 400+ 31.00 200-399 32.50 400+ 31.10 I a) What quantity should be ordered, and which supplier should be used? b) Discuss factor(s) should be considered besides total cost.
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: Vendor 1 Vendor 2 Quantity Price/LB (£) Quantity Price/LB (E) 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 (£) 34.50 1-199 34.25 1-99 200-399 33.00 100-199 33.75 400+ 31.00 200-399 32.50 400+ 31.10 I a) What quantity should be ordered, and which supplier should be used? b) Discuss factor(s) should be considered besides total cost.
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
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Transcribed Image Text: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:
Vendor 1
Vendor 2
Quantity
Price/LB (£)
Quantity
Price/LB (E)
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 (£)
34.50
1-199
34.25
1-99
33.75
200-399
33.00
100-199
400+
31.00
200-399
32.50
400+
31.10
a) What quantity should be ordered, and which supplier should be used?
b) Discuss factor(s) should be considered besides total cost.
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