Elliott Inc. is a manufacturer of fancy spectacles located in Bath a city to the east of London. It procures its raw materials from three suppliers in London. Elliott Inc., rents trucks from Wentworth & Co., to source separately from each supplier. Each truck rental costs a flat rate of 800.00. Wentworth & Co also charges Elliott Inc. an extra 200.00 for each stopover. Elliott Inc is considering aggregating sourcing on a single truck.

Elliott Inc. sources materials from suppliers based on the demand it faces. The most commonly sold spectacles has an expected demand of 15000/year, the medium selling spectacles have a demand 9000/year, and most expensive and least demanded spectacles have a demand of 2700/year. Each spectacle costs 3 and Elliott Inc., incurs an annual holding cost of 20 percent.

a) What is the optimal order quantity of each part if Elliott Inc., sources separately from each supplier? What is the annual transportation and holding cost?

b) What is the optimal order quantity for each product if Elliott Inc. aggregates shipments from each of the three suppliers into a single order? What is the annual transportation and holding cost?

c) What is the optimal order quantity if Elliott Inc, wants a tailored ordering policy? What is the annual transportation and holding cost?