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The demand for a product is 6000 items per year and carrying costs are 20% per year. The item sells in the market for $16/item.
The demand for a product is 6000 items per year and carrying costs are 20% per year. The item sells in the market for $16/item. You are considering purchase from the following three suppliers. Ordering Cost Order Quantity Discount Supplier A $600 per order No restriction No discount Supplier B $1200 per order At least 2500 4% discount Supplier C $2000 per order At least 3000 9% discount Show the total cost of using each supplier and the select the best one. Supplier ID _____________ EOQ _________________ Quantity to be ordered _______________ Average Inventory __________ Number of orders/year ______________ Total Inventory Cost ____________ Grand Total cost ___________________ Supplier ID _____________ EOQ _________________ Quantity to be ordered _______________ Average Inventory __________ Number of orders/year ______________ Total Inventory Cost ____________ Grand Total cost ___________________ Supplier ID _____________ EOQ _________________ Quantity to be ordered _______________ Average Inventory __________ Number of orders/year ______________ Total Inventory Cost ____________ Grand Total cost ___________________ Conclusion: Order _________ units per order from Supplier _____ to minimize cost. The lowest annual cost including item cost will be ________________
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