A buyer received bids from three suppliers for a vital component part for its latest product. Given the following information, use total cost analysis to determine which supplier should be chosen. Late delivery of the component results in 70 percent lost sales and 30 percent back orders of finished goo

Order lot size	2,000
Requirements (annual forecast)	240,000 units
Weight per engine	40 pounds
Order processing cost	$200/order
Inventory carrying rate	20% per year
Cost of working capital	10% per year
Profit margin	15%
Price of finished goods	$10,500
Back-order cost	$120 per unit

Unit Price	Supplier 1	Supplier 2	Supplier 3
1 to 999 units/order	$200.00	$205.00	$198.00
1,000 to 2,999 units/order	$195.00	$190.00	$192.00
3,000 + units/order	$190.00	$185.00	$190.00
Tooling Cost	$12,000	$10,000	$15,000
Terms	2/10, net 30	1/15, net 30	1/10, net 20
Distance	120 miles	100 miles	150 miles
Supplier Quality Rating	2%	1%	2%
Supplier Delivery Rating	1%	1%	2%

Truckload (TL ≥ 40,000 lbs):  $0.95 per ton-mile

Less-than-truckload (LTL):    $1.20 per ton-mile

Note: per ton-mile = 2,000 lbs per mile; number of days per year = 365