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Price Inc. is a manufacturer of gold-plated knickknacks located in Portsmouth, NH. It procures its raw materials from three suppliers in Vermont and Northern NY
Price Inc. is a manufacturer of gold-plated knickknacks located in Portsmouth, NH. It procures its raw materials from three suppliers in Vermont and Northern NY state. Price Inc., rents trucks from Bertram & sons., to source separately from each supplier. Each truck rental costs a flat rate of $1000. Bertram & sons also charges Price Inc. an extra $300.00 for each stopover. Price Inc. sources materials from suppliers based on the demand it faces. The most commonly sold knickknack has an expected demand of 12000/year, the medium selling knickknack has a demand 9000/year, and most expensive and least demanded knickknack has a demand of 5400/year. Each spectacle costs $8 and Price Inc., incurs an annual holding cost of 10 percent. a) What is the optimal order quantity of each part if Price 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 Price 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 Price Inc, wants a tailored ordering policy? What is the annual transportation and holding cost?
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