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Operations Management
VENDOR 1 VENDOR 2 QUANTITY PRICE/LB QUANTITY PRICE/LB 1-499 $17.00 1-399 $17.10 500-999 16.75 400-799 16.85 1,000+ 16.50 800-1,199 16.60 1,200+ 16.25

VENDOR 1 VENDOR 2 QUANTITY PRICE/LB QUANTITY PRICE/LB 1-499 $17.00 1-399 $17.10 500-999 16.75 400-799 16.85 1,000+ 16.50 800-1,199 16.60 1,200+ 16.25

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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Question
Emery Pharmaceutical uses an unstable chemical
compound that must be kept in an environment where both temperature
and humidity can be controlled. Emery uses 800 pounds
per month of the chemical, estimates the holding cost to be 50%
of the purchase price (because of spoilage), and estimates order
costs to be $50 per order. The cost schedules of two suppliers are
as follows:                                                                                                                                                                 a) What is the economic order quantity for each supplier?
b) What quantity should be ordered, and which supplier should be used?
c) What is the total cost for the most economic order size?
d) What factor(s) should be considered besides total cost?
VENDOR 1 VENDOR 2 QUANTITY PRICE/LB QUANTITY PRICE/LB 1-499 $17.00 1-399 $17.10 500-999 16.75 400-799 16.85 1,000+ 16.50 800-1,199 16.60 1,200+ 16.25
Transcribed Image Text:VENDOR 1 VENDOR 2 QUANTITY PRICE/LB QUANTITY PRICE/LB 1-499 $17.00 1-399 $17.10 500-999 16.75 400-799 16.85 1,000+ 16.50 800-1,199 16.60 1,200+ 16.25
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