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Awesome Products Company manufactures a product sold to retailers. It is considering suppliers for its process. The supplier quality involves four activity areas: Activity Area

Awesome Products Company manufactures a product sold to retailers. It is considering suppliers for its process. The supplier quality involves four activity areas:

Activity Area Cost Driver and Rate
Order cost $120 per purchase order
Defective units $200 per unit internal failure costs
Delivery trips $5 per delivery mile
Carrying cost $1 per order

The following supplier information is given:

X3 Y2 Z1
Materials units needed 100,000 100,000 100,000
Actual purchase price $5 $4.99 $5.01
Number of purchase orders 20 30 18
Number of defects 6 12 0
Number of deliveries 20 30 18

Which supplier has the most defective units?

a.Z1

b.Y2

c.X3

d.They are equal.

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