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SharkNinja is between two suppliers for motors used in production of its vacuum cleaners. Annual holding cost is 34% of the purchase cost of the
SharkNinja is between two suppliers for motors used in production of its vacuum cleaners. Annual holding cost is 34% of the purchase cost of the motor per unit per year. Demand for the motors is normally distributed with a mean of 142 units per week and a standard deviation of 28 units per week. SharkNinja uses a service level of 97% for these motors. Assume SharkNinja operates 7 days per week, 52 weeks per year, and 364 days per year. SharkNinja has collected the information on related costs from both suppliers in Table 1. Supplier A has a lower procurement cost per unit but it is slower and less reliable with a higher fixed order cost. SharkNinja would like to consider a total cost of ownership approach to determine which supplier to use
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