Question
The purchasing manager of the company Semiconductores de San Vicente Tancuayalab must decide between 3 different suppliers to source a raw material used in the
The purchasing manager of the company "Semiconductores de San Vicente Tancuayalab" must decide between 3 different suppliers to source a raw material used in the production of semiconductors. Supplier A sells for $ 2.50 a kilo, but does not consider offers less than 2,000 kilos. Supplier B sells for $ 1.50 a kilo, but with an extra transportation cost of $200 per lot. Supplier C sells for $ 1.50 a kilo for orders less than 5000 kilos and offers a 20% discount for each kilo in excess of 5000 units (incremental discounts). If the demand is 18,000 kilos per year, the ordering cost is $ 110, and the inventory carrying rate is 40% per year, determine the optimal quantity to order and which supplier should be selected.
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