Roaring Lion 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, 10% of motherboards purchased from Alpha will be inspected and 30% of motherboards purchased from Beta will be inspected The following data refers to costs associated with Alpha and Beta Alpha 40 18,000 Beta 40 18,000 Number of orders per year 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 $ 90 86 $14 10 300 units 300 units 900 $10 400 $ 21 10% $2.80 2.80 300 40 $ 21 10% Requirements 1. What is the relevant cost of purchasing from Alpha and Beta? 2. What factors other than cost should Roaring Lion consider? ..To begin requirement 1 calculate the relevant cost of purchasing from Alpha and Beta Calculate the relevant cost of purchasing from Alpha and Beta Alpha Beta Purchase costs Ordering costs Inspection costs Required annual return on investment Stockout costs Return costs Other carrying costs Total cost