Oleg Blokhin Sportwear uses, for the goalkeeper gloves, a time sensitive and unstable chemical compound that must be kept in an environment where both temperature and humidity can be controlled. He uses 250 pounds per month of the chemical, estimates the holding cost to be £4.25 (because of spoilage), and estimates order costs to be £20 per order. The cost schedules of four suppliers are as follows: + Quantity 1-49 50-99 100-149 150-249 250-349 350-499 500+ Vendor 1 200-399 400-499 500+ Quantity 1-99 100-199 Price/LB (£) 36.00 34.75 33.55 32.35 Vendor 3 31.25 30.50 30.00 Price/LB (£) 34.50 33.75 32.00 31.25 30.50 Vendor 2 Quantity 1-74 75-149 150-224 225-299 300-374 375-449 450+ Price/LB (£) 35.00 34.00 32.80 31.90 31.40 30.90 30.50 Vendor 4 Quantity 1-199 200-399 400-599+ 600+ Price/LB (£) 36.00 34.00 32.00 30.00

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Can you please explain which quantity should be ordered, and which supplier should be used?

Oleg Blokhin Sportwear uses, for the goalkeeper gloves, a time sensitive and unstable chemical
compound that must be kept in an environment where both temperature and humidity can be
controlled. He uses 250 pounds per month of the chemical, estimates the holding cost to be £4.25
(because of spoilage), and estimates order costs to be £20 per order. The cost schedules of four
suppliers are as follows:
+
Vendor 1
Quantity
1-49
50-99
100-149
150-249
250-349
350-499
500+
Price/LB (£)
36.00
34.75
33.55
32.35
31.25
30.50
30.00
Vendor 3
Quantity
1-99
100-199
200-399
400-499
500+
Price/LB (£)
34.50
33.75
32.00
31.25
30.50
Vendor 2
Quantity
1-74
75-149
150-224
225-299
300-374
375-449
450+
Price/LB (£)
35.00
34.00
32.80
31.90
31.40
30.90
30.50
Vendor 4
Quantity
1-199
200-399
400-599+
600+
Price/LB (£)
36.00
34.00
32.00
30.00
Transcribed Image Text:Oleg Blokhin Sportwear uses, for the goalkeeper gloves, a time sensitive and unstable chemical compound that must be kept in an environment where both temperature and humidity can be controlled. He uses 250 pounds per month of the chemical, estimates the holding cost to be £4.25 (because of spoilage), and estimates order costs to be £20 per order. The cost schedules of four suppliers are as follows: + Vendor 1 Quantity 1-49 50-99 100-149 150-249 250-349 350-499 500+ Price/LB (£) 36.00 34.75 33.55 32.35 31.25 30.50 30.00 Vendor 3 Quantity 1-99 100-199 200-399 400-499 500+ Price/LB (£) 34.50 33.75 32.00 31.25 30.50 Vendor 2 Quantity 1-74 75-149 150-224 225-299 300-374 375-449 450+ Price/LB (£) 35.00 34.00 32.80 31.90 31.40 30.90 30.50 Vendor 4 Quantity 1-199 200-399 400-599+ 600+ Price/LB (£) 36.00 34.00 32.00 30.00
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Follow-up Question

Vendor 1

Quantity

Price/LB (£)

1-49

36.00

50-99

34.75

100-149

33.55

150-249

32.35

250-349

31.25

350-499

30.50

500+

30.00

Vendor 3

Quantity

Price/LB (£)

1-99

34.50

100-199

33.75

200-399

32.00

400-499

31.25

500+

30.50

Vendor 2

Quantity

Price/LB (£)

1-74

35.00

75-149

34.00

150-224

32.80

225-299

31.90

300-374

31.40

375-449

30.90

450+

30.50

Vendor 4

Quantity

Price/LB (£)

1-199

36.00

200-399

34.00

400-599+

32.00

600+

30.00

 

 

Identify and discuss what quantity should be ordered, and which supplier should be used? 

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Follow-up Question

 

Discuss factor(s) that should be considered besides total cost. 

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Follow-up Question

Discuss factor(s) that should be considered besides total cost. 

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Costing for Spoilage, rework and scrap
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