Baa Sheep Computer Co. outsources the production of motherboards for its computers. It is currently deciding which of two suppliers to use: Alpha or Beta. Due to differences in the product failure rates in the two companies, 5% of motherboards purchased from Alpha will be inspected and 20% of motherboards purchased from Beta will be inspected. The following data refer to costs associated with Alpha and Beta: (Click the icon to view the data.) Requirements 1. What is the relevant cost of purchasing from Alpha and Beta? 2. What factors other than cost should Baa Sheep consider? Data table Requirement 1. What is the relevant cost of purchasing from Alpha and Beta? Alpha Beta Calculate the relevant cost of purchasing from Alpha and Beta. Number of orders per year 80 80 Alpha Beta 11,000 11.000 Purchase costs $ 97 $ 90 $ 15 $ 10 $ 5 Ordering costs Inspection costs Required annual return on investment Stockout costs Return costs $ 5 200 units 200 units Annual motherboards demanded Price per motherboard Ordering cost per order Inspection cost per unit Average inventory level Expected number of stockouts Stockout cost (cost of rush order) per stockout Units returned by customers for replacing motherboards Cost of replacing each motherboard Required annual return on investment Other carrying cost per unit per year 200 600 $ 5 $ 6 Other carrying costs 80 800 Total cost $ 25 $ 25 10% 10% $ 2.10 $ 2.10