Horizon Cellular manufactures cell phones for exclusive use in its communication network. Management must select a circuit board supplier for a new phone soon to be introduced to the market. The annual requirements (D) are 40,000 units and Horizon's plant operates 250 days per year. The data for three suppliers are in the attached table. Annual Freight Costs Shipping Quantity (Q) Supplier10,00020,000Price/Unit (p)Annual Holding Cost/Unit (H)Lead Time (L) (days)Annual Administrative CostMaterial CostsAbbott$11,000$8,500$29$5.804$11,000$232,000.00Baker$12,000$9,500$31$6.203$12,000$1,240,000Carpenter$9,000$7,000$28$5.608$9,000$1,120,000Which supplier and shipping quantity will provide the lowest total cost for Horizon Cellular? Using the supplier [X] and a shipping quantity of [X] units is the lowest cost alternative, with annual total costs to Horizon Cellular of [X]. (Quantity and Annual Total Costs are integer values). Horizon is using an annual holding cost equal to [X]% of the items value.

Given data, Supplier 10,000 20,000 Price/Unit (p) Annual Holding Cost/Unit (H) Lead Time (L) (days) Annual Administrative Cost Material Costs Abbott $11,000 $8,500 $29 $5.80 4 $11,000 $232,000.00 Baker $12,000 $9,500 $31 $6.20 3 $12,000 $1,240,000 Carpenter $9,000 $7,000 $28 $5.60 8 $9,000 $1,120,000

Answered: Horizon Cellular manufactures cell…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

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Horizon Cellular manufactures cell phones for exclusive use in its communication network. Management must select a circuit board supplier for a new phone soon to be introduced to the market. The annual requirements (D) are 40,000 units and Horizon's plant operates 250 days per year. The data for three suppliers are in the attached table.

	Annual Freight Costs
	Shipping Quantity (Q)
Supplier	10,000	20,000	Price/Unit (p)	Annual Holding Cost/Unit (H)	Lead Time (L) (days)	Annual Administrative Cost	Material Costs
Abbott	$11,000	$8,500	$29	$5.80	4	$11,000	$232,000.00
Baker	$12,000	$9,500	$31	$6.20	3	$12,000	$1,240,000
Carpenter	$9,000	$7,000	$28	$5.60	8	$9,000	$1,120,000

Which supplier and shipping quantity will provide the lowest total cost for Horizon Cellular? Using the supplier [X] and a shipping quantity of [X] units is the lowest cost alternative, with annual total costs to Horizon Cellular of [X]. (Quantity and Annual Total Costs are integer values). Horizon is using an annual holding cost equal to [X]% of the items value.

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