Use the following information to determine which supplier for steering wheels is more costeffective using total cost analysis. Late delivery of the component results in lost sales and back orders of finished goods.

Table

Order lot size

Annual Requirements units

Weight per steering wheel pounds

Order processing cost $

Inventory carrying rate per year

Cost of working capital per year

Profit margin

Price of finished golf cart $

Back order cost $per unit

Table

Unit Price Supplier A Supplier B

to unitsorder $ $

tounitsorder $ $

Tooling cost $ $

Terms net net

Distance miles miles

Supplier Quality Rating defects

Supplier Delivery Rating late

Here are the freight rates for

Truckload TL lbs: $per tonmile

Truckload Lessthantruckload LTL: $per tonmile

Note: per tonmile lbs per mile; number of days per year