Question
A manufacturing company purchases two important parts from two different suppliers in the same region. The two suppliers are located about 100 miles apart. There
A manufacturing company purchases two important parts from two different suppliers in the same region. The two suppliers are located about 100 miles apart. There are two shipping options for the two parts ordered.
Option 1: Orders are shipped separately from each supplier. The contracted trucking company charges $544 for a shipment from each supplier.
Option 2: Orders are aggregated in a single shipment. The trucking company needs to drive additional 100 miles to pick up orders from the other supplier. So there will be an additional charge of $139 for the additional stop.
The weekly demand and unit cost information are listed in the table below (assume 52 weeks/year). Assume the unit annual holding cost is 7% of the unit cost for part A, and 17% for part B.
Part A | Part B | |
Average weekly demand | 249 | 393 |
Unit cost | $7 | $17 |
Please determine the total annual inventory ordering cost for the company in option 2.
Numbers only. Keep 3-decimal if not exact, either round up or down is ok.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started