Bradley Solutions and Alexander Limited are two well- established suppliers of inexpensive tools. Weekend Projects is a national chain of retail outlets that caters to the occasional fixer-upper who would prefer to get the job done fast rather hat investing in a well-appointed tool box. Weekend Projects wants to find a supplier for a particular tool set that promises to be a big seller. Expected annual sales are 100,000 units. Weekend€™s ware houses operate 50 weeks a year. Management collected data on the two suppliers, which are contained in the first table.

a. Which of the two suppliers would provide the lowest annual cost to Weekend Projects? What shipping quantity would you suggest?
b. Before management could make a decision, another option became available. Zelda Tools offered the tool set for only S$.00 however, the lead time is longer than the other two suppliers. Zelda is a new supplier and has not been in the industry very long. Additional data for Zelda are in the second table. Management has begun to assess the administrative costs to manage the contract with Zelda. What is the lowest level of administrative costs at which Weekend Projects would be nu between using Zelda versus the option you chose in parta?

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Freight Costs Shipping Quantity Supplier 10,000 25,000 50,000 Price/Unit Annual Holding Cost/Unit Lead Time (wks) Annual Administrative Cost Bradiey $35,000 $25,000 $1800 $8.10 Alexander $40,000$28,000 $19,000$8.10 $1.62 $1.62 $10,000 $15,000 Freight Costs Shipping Quantity Supplier 10,000 25,000 50,000 Price/Unit Annual Holding Cost/Unit Lead Time (wks) Zelda $45,000 $25,000 $17,000 $8.00 $1.60