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The Burdell Wheel and Tire Company assembles tires on wheel rims for use on cars during the manufacture of vehicles by the automotive industry. Burdell

The Burdell Wheel and Tire Company assembles tires on wheel rims for use on cars during the manufacture of vehicles by the automotive industry. Burdell wants to locate a low-cost supplier for the tires he uses in his assembly operation. The supplier will be selected based on the total annual cost to supply Burdell's needs. Burdell's annual requirements are for 25,000 tires, and the company operates 250 days a year. The following data is available for the two suppliers being considered.

SUPPLIER

SHIPPING QUANTITY PER SHIPMENT

Annual

SHIPPING COSTS

PRICE / TIRE (p)

INVENTORY HOLD COSTS (H)

LEAD TIME (DAYS)

Annual

ADMIN. COSTS

LEXINGTON TIRE

2,000

$18,000

$30

$6.00

6

$15,000

IRMO AUTO

1,000

$25,000

$29

$5.80

4

$18,000

Using the Total Cost Analysis for Supplier Selection, which supplier should Burdell choose? Provide details to justify your answer. The total costs are calculated as the sum of material costs, freight (shipping) costs, inventory costs, and administrative costs.

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