Quantity Discount Problem - Graduate Level
Not what you're looking for?
A company will begin stocking remote control devices. Expected monthly demand is 800 units. The controllers can be purchased from either supplier A or supplier B. Their price lists are as follows.
Supplier A
Quantity/Unit Price
1-199 / $14
200-499 / $13.80
500+ / $13.60
Supplier B
Quantity/Unit Price
1-149 / $14.10
150-349 / $13.90
350+ / $13.70
Ordering cost is $40 and annual holding cost is 25% of unit price per unit. Which supplier should be used and what order quantity is optimal if the intent is to minimize the total annual cost?
Purchase this Solution
Solution Summary
The solution explains how to choose between two suppliers so as to minimize the total cost
Solution Preview
The attached file gives the Economic Order Quantity (EOQ) Calculation. The EOQ uses ordering cost which is $40, Annual Usage which is 800*12=9,600 and the carrying cost. The carrying cost ...
Purchase this Solution
Free BrainMass Quizzes
Team Development Strategies
This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.
SWOT
This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.
Learning Lean
This quiz will help you understand the basic concepts of Lean.
Operations Management
This quiz tests a student's knowledge about Operations Management
Understanding the Accounting Equation
These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.