14. A buyer received bids from three suppliers for a vital component part for its latest product. Given the following information, use total cost analysis to determine which supplier should be chosen. Late delivery of the component results in 70 percent lost sales and 30 percent back orders of finished goods. Order lot size Requirements (annual forecast) Weight per engine Order processing cost Inventory carrying rate Cost of working capital Profit margin Price of finished goods Back order cost UNIT PRICE 1 to 999 units/order 1,000 to 2,999 units/order 3,000+ units/order Tooling Cost Terms Distance Supplier Quality Rating Supplier Delivery Rating SUPPLIER 1 $200.00 $195.00 $190.00 $12,000 2/10, net 30 120 miles 2% 1% 2,000 240,000 units 40 pounds $200/order 20% per year 10% per year 15% $10,500 $120 per unit SUPPLIER 2 $205.00 $190.00 $185.00 $10,000 1/15, net 30 100 miles 1% 1% SUPPLIER 3 $198.00 $192.00 $190.00 $15,000 1/10, net 20 150 miles 2% 2%

14. A buyer received bids from three suppliers for a vital component part for its latest product. Given the following information, use total cost analysis to determine which supplier should be chosen. Late delivery of the component results in 70 percent lost sales and 30 percent back orders of finished goods