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The Johnson Company purchases components from three suppliers. Components purchased from Supplier A are priced at $5 each and used at the rate of 25,000
The Johnson Company purchases components from three suppliers. Components purchased from Supplier A are priced at $5 each and used at the rate of 25,000 units per year. Components purchased from Supplier B are priced at $4 each and are used at the rate of 3,000 units per year. Components purchased from Supplier C are priced at $5 each and used at the rate of 900 units per year. Johnson incurs a holding cost of 20 percent per year. Currently, Johnson purchases a separate truckload from each supplier. As part of the JIT drive, Johnson has decided to aggregate purchases from the three suppliers. The trucking company charges a fixed cost of $400 for the truck with an additional charge of $80 for each stop. Thus, if Johnson asks for a pickup from only one supplier, it charges$480; from two suppliers, it charges $560, and from three suppliers, it charges $640. 1) Compute the optimal order quantity of each item when orders are aggregated. (15 points) 2) Compute the optimal annual ordering cost when orders are aggregated. (15 points)
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