Quantity discount (3% each question) A manufacturing's demand is 4,200 units yearly There are two suppliers bidding their business to this manufacturer Ordering cost is $42.00 and annual holding cost per unit is 15% of unit price. (easier for your calculations) Annual demand Ordering cost Holding cost Supplier A 3% Annual Quantity <=499 unit price $15.00 order Q product cost Annual ordering cost Annual holding cost Total cost 500-999 $14.50 >=1000 $14.00 Supplier B 3% Quantity unit price order Q Annual product cost Annual ordering cost Annual holding cost Total cost <=400 $15.25 401-799 $14.50 >=800 $14.25 Which Supplier at what amount? Supplier Amount 4200 $42.00 15% Answering the following question: 1. If the firm only allows 5 orders per year (and it has to be 5 times) with the current yearly demand 4,200 units, what will be your decision? (you can use either supplier, i.e., you combine A and B and mix them (say, 2 times from A, 3 times from B at what volume). (this question may not have a standard answer, the purpose is to know how do you make decision based on your logic to reach the lowest total cost) (total order must = 4,200 units, not one unit more, not one unit less) How many A? Answers How many B? What Quantity? What Quantity?
Quantity discount (3% each question) A manufacturing's demand is 4,200 units yearly There are two suppliers bidding their business to this manufacturer Ordering cost is $42.00 and annual holding cost per unit is 15% of unit price. (easier for your calculations) Annual demand Ordering cost Holding cost Supplier A 3% Annual Quantity <=499 unit price $15.00 order Q product cost Annual ordering cost Annual holding cost Total cost 500-999 $14.50 >=1000 $14.00 Supplier B 3% Quantity unit price order Q Annual product cost Annual ordering cost Annual holding cost Total cost <=400 $15.25 401-799 $14.50 >=800 $14.25 Which Supplier at what amount? Supplier Amount 4200 $42.00 15% Answering the following question: 1. If the firm only allows 5 orders per year (and it has to be 5 times) with the current yearly demand 4,200 units, what will be your decision? (you can use either supplier, i.e., you combine A and B and mix them (say, 2 times from A, 3 times from B at what volume). (this question may not have a standard answer, the purpose is to know how do you make decision based on your logic to reach the lowest total cost) (total order must = 4,200 units, not one unit more, not one unit less) How many A? Answers How many B? What Quantity? What Quantity?
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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Please help me with this practice problem. Please use specific equations that apply and where to put them. Please list out the steps. Thank you
Transcribed Image Text:Quantity discount (3% each question)
A manufacturing's demand is 4,200 units yearly
There are two suppliers bidding their business to this manufacturer
Ordering cost is $42.00 and annual holding cost per unit is 15% of unit price.
(easier for your calculations)
Annual demand
Ordering cost
Holding cost
Supplier A
3%
Annual
Quantity
<=499
unit price
$15.00
order Q
product cost
Annual
ordering cost
Annual
holding cost
Total cost
500-999
$14.50
>=1000
$14.00
Supplier B
3%
Quantity
unit price
order Q
Annual
product cost
Annual
ordering cost
Annual
holding cost
Total cost
<=400
$15.25
401-799
$14.50
>=800
$14.25
Which Supplier at what amount?
Supplier
Amount
4200
$42.00
15%
Answering the following question:
1. If the firm only allows 5 orders per year (and it has to be 5 times) with the current yearly demand 4,200 units, what will be your decision?
(you can use either supplier, i.e., you combine A and B and mix them (say, 2 times from A, 3 times from B at what volume).
(this question may not have a standard answer, the purpose is to know how do you make decision based on your logic to reach the lowest total cost)
(total order must = 4,200 units, not one unit more, not one unit less)
How many A?
Answers
How many B?
What Quantity?
What Quantity?
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