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A purchasing agent for a particular type of silicon wafer used in the production of semiconductors must decide among two sources.Source A will sell the

A purchasing agent for a particular type of silicon wafer used in the production of semiconductors must decide among two sources.Source A will sell the silicon wafers for $2.50 per wafer, independently of the number of wafers ordered.Source B accepts any order quantity, but sells the wafers for $2.55 each for orders of up to 3,000 wafers and $2.25 each for the incremental amount ordered over 3,000 wafers.Assume an order setup cost of $100 and annual requirement of 20,000 wafers.Holding cost is 20% of its purchasing cost per unit per year.Which source should be used? And what is the order size? What is the total cost of ownership? Let's assume that the order size has to be a multiple of 500, i.e., you can only order 500,1000,1500,2000, etc.

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