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Alpha Medical Manufacturing (AMM), located in Punta Gorda, Florida, produces medical devices for orthopedic surgery including replacement parts for human knees, hips, and elbows, and

Alpha Medical Manufacturing (AMM), located in Punta Gorda, Florida, produces medical devices for orthopedic surgery including replacement parts for human knees, hips, and elbows, and surgical tools. One product they assemble in their factory is a special aluminum-alloy surgical screw used to anchor human tissue to the bone. The screw consists of four component parts, one being the aluminum alloy while the other three parts are made of medical grade plastics. AMM is evaluating three Tier 1 suppliers to manufacture the aluminum part of the orthopedic screw. Annual demand for this item is 40,000 units per year, with 365 days in a year. Other information is shown in the table below.

Alpha Medical Manufacturing (AMM) Outsourcing Information for a Surgical Screw
Contract Manufacturer (Tier 1 Supplier) Price per Unit (C) @ Q = 20,000 Price per Unit (C) @ Q = 40,000 Tariff Cost (Tc) per Unit Transport Mode Cost (Tm) per Unit Order Costs (Co) Cost to Store One Unit per Year (Ch) Order Lead Time in Days
Xiajing Supplier $1.16 $0.77 $0.19 $0.30 $625 $1.00 140
Boston Medical Supplier $1.27 $1.10 $0.00 $0.20 $270 $1.30 120
Werkzeug Supplier $1.46 $1.02 $0.11 $0.30 $300 $1.10 140
  1. What is the total annual logistics cost for each supplier when Q = 20,000 and Q = 40,000? Do not round intermediate calculations. Round your answers to the nearest dollar.

    Order Quantity (Q)
    Global Supplier 20,000 units 40,000 units
    Xiajing Supplier $ _____ $ _____
    Boston Medical Supplier $ _____ $ _____
    Werkzeug Supplier $ _____ $ _____
  2. What supplier and order quantity do you recommend based on these total costs?

    The company should choose (-Select-Xiajing Supplier: Boston Medical Supplier: Werkzeug Supplier) and the order quantity of (-Select-40,000: 20,000) units

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