Question
Skatz Company is one of the major manufacturers of roller skates. They only assemble at their plant and buy all the components from external suppliers.
Skatz Company is one of the major manufacturers of roller skates. They only assemble at their plant and buy all the components from external suppliers. They are not happy with the current wheel supplier and decided to find a new source for their best model. The demand is 400,000 wheels a year and they have received different pricing plans from other vendors. Vendor A has the following discount plan on all units: $ 3.25 per wheel if the quantity ordered is less than 5,000, $ 3.00 per wheel if the quantity ordered is greater than 5,000 and less than 15,000, and $ 2.60 per wheel if they order more. of 15,000. Vendor B offers a price of $ 3.25 if the order is less than 10,000 and $ 2.8 3 per wheel for each unit purchased beyond 10,000, using an incremental discount. The two suppliers have the same quality of wheels. The cost of the order is $ 150 and the cost of holding the inventory is taken as 30% per year. a) Evaluate the optimal quantity to order. b) Calculate the total annual cost
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