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Harley purchases components form three suppliers. Components purchased from Supplier A are priced at $50 each and used at a rate of 24,000 units per
Harley purchases components form three suppliers. Components purchased from Supplier A are priced at $50 each and used at a rate of 24,000 units per year. Components purchased from Supplier Bare priced at $40 each and are used at the rate of 2,500 units per year. Components purchased from Supplier C are priced at $50 each and used at the rate of 1,000 units per year. Currently, Harley purchases a separate truckload from each supplier. Harley has decided to aggregate purchases from the three suppliers into a single truckload. The trucking company charges a fixed cost of $4000 for each order and an additional charge of $1000 for each stop at a supplier. Thus, currently Harley incurs a fixed order cost of $5000 ( 4000 1000) for ordering each component separately, but Harley wants to place joint orders for the three components (not necessarily with the same quantity) which would incur a fixed order cost of $7000 (= 4000 1000 1000+ 1000). Harley uses a holding cost of 20 percent. (20 points total) What is the total (holding + ordering) cost for Harley's current ordering policy? (10 points) a. b. How much could Harley save if it places joint orders (complete aggregation) for the three components? (10 points)
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