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ABC, Inc., produces a GPS device that is becoming popular in parts of Europe. When XYZ produces one of these, a printed circuit board (

ABC, Inc., produces a GPS device that is becoming popular in parts of Europe. When XYZ produces one of these, a printed circuit board
(
PCB
)
is used, and it is populated with several electronic components. It determines that it needs about
9
,
6
0
0
per year of this type of PCB
.
Demand is relatively constant throughout the year, and the ordering cost is about $
4
0
per order; the holding cost is
2
5
%
of the price of each PCB
.
Two companies are competing to become the dominant supplier of the PCBs
,
and both have now offered discounts, as shown in the following table. Supplier A Supplier B
1
-
1
9
9
$
1
4
.
0
0
1
-
1
4
9
$
1
4
.
1
0
2
0
0
-
4
9
9
$
1
3
.
8
0
1
5
0
-
3
4
9
$
1
3
.
9
0
5
0
0
or more $
1
3
.
6
0
3
5
0
or more $
1
3
.
7
0
If ABC wishes to minimize the total annual inventory cost and chooses Supplier B and decides to order 471

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