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Frank operates The Frankfurter, a hot dog restaurant in a food court. He is trying to improve his cost by making a supplier and transporter
Frank operates The Frankfurter, a hot dog restaurant in a food court. He is trying to improve his cost by making a supplier and transporter selection decision. The two options are: to buy his dogs from Franks and Beans, a local supplier, or Cow and Pig, a national meat warehouse. The two suppliers differ in the perunit price. Transporter offers different fixed transportation cost per order to deliver goods from different suppliers to The Frankfurter. The relevant data for The Frankfurter, as well as the two suppliers and the transporter, is as follows:
The Frankfurter
D dogsyr
Annual Interest rate
Franks and Beans
Perunit price $ dog
Fixed transportation cost
$ order
Cow and Pig
Perunit price $ dog
Fixed transportation cost
$ order
If he buys from Frank and Beans, what will be the i holding cost in $ per unit per year ii optimal order size EOQ, and iii Annual ordering transportation cost and annual holding cost?
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