Wanda Lux must select a supplier for a plastic bottle and proprietary dispenser for its new hair shampoo. Three suppliers have placed bids; at Wanda's request, all bids are for a shipping quantity (Q) of 20,000 bottles with annual requirements (D) of 40,000 units. Wanda's factory operates 250 days a year. The following table shows each supplier's price, estimated annual freight costs, and current lead times; management has added estimates for holding costs and administrative oversight costs for each supplier. Freight Costs Using Supplier Dover Plastics Evan & Sons Farley, Inc. a. Which of the three suppliers will provide the lowest annual cost to Wanda Lux? Annual Price/Unit Holding Cost/Unit (P) (H) $1.02 $5.10 $5.00 $1.00 $5.15 $1.03 $3,000 $3,500 $4,500 Lead Time (L) Annual Administrative (days) 14 17 18 D Costs $4,000 $3,000 $5,000 is the lowest cost alternative, with annual total costs to Wanda Lux of $. (Enter your response rounded to the nearest whole number.)

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
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Wanda Lux must select a supplier for a plastic bottle and proprietary dispenser for its new hair shampoo. Three suppliers have placed bids; at Wanda's request, all bids are for a shipping quantity (Q)
of 20,000 bottles with annual requirements (D) of 40,000 units. Wanda's factory operates 250 days a year. The following table shows each supplier's price, estimated annual freight costs, and current
lead times; management has added estimates for holding costs and administrative oversight costs for each supplier.
Using
Freight
Costs
Supplier
$3,000
Dover Plastics
Evan & Sons
Farley, Inc.
$3,500
$4,500
a. Which of the three suppliers will provide the lowest annual cost to Wanda Lux?
Annual
Price/Unit Holding Cost/Unit
(P)
View an example Get more help.
$5.10
$5.00
$5.15
(H)
$1.02
$1.00
$1.03
Lead
Time (L)
(days)
14
17
18
47
D
is the lowest cost alternative, with annual total costs to Wanda Lux of $. (Enter your response rounded to the nearest whole number.)
Annual Administrative
Costs
$4,000
$3,000
$5,000
Clear all
Check answer
Transcribed Image Text:Wanda Lux must select a supplier for a plastic bottle and proprietary dispenser for its new hair shampoo. Three suppliers have placed bids; at Wanda's request, all bids are for a shipping quantity (Q) of 20,000 bottles with annual requirements (D) of 40,000 units. Wanda's factory operates 250 days a year. The following table shows each supplier's price, estimated annual freight costs, and current lead times; management has added estimates for holding costs and administrative oversight costs for each supplier. Using Freight Costs Supplier $3,000 Dover Plastics Evan & Sons Farley, Inc. $3,500 $4,500 a. Which of the three suppliers will provide the lowest annual cost to Wanda Lux? Annual Price/Unit Holding Cost/Unit (P) View an example Get more help. $5.10 $5.00 $5.15 (H) $1.02 $1.00 $1.03 Lead Time (L) (days) 14 17 18 47 D is the lowest cost alternative, with annual total costs to Wanda Lux of $. (Enter your response rounded to the nearest whole number.) Annual Administrative Costs $4,000 $3,000 $5,000 Clear all Check answer
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