Question

M. P. VanOyen Manufacturing has gone out on bid for a regulator component. Expected demand is

725725

units per month. The item can be purchased from either Allen Manufacturing or Baker Manufacturing. Their price lists are shown in the table. Ordering cost is

?$5555?,

and annual holding cost per unit is

?$55.

??????????????????????????????????????????????????????????????????????????????????????

  ??????????????????????????????????????????????????

Allen Mfg.		Baker Mfg.
Quantity	Unit Price	Quantity	Unit Price
?1-499	?$16.00??	?1-399	?$16.10??
?500-999	15.50	?400-799	15.60
?1000+	15.00	?800+	15.10

?a) What is the economic order quantity if price is not a? consideration?

437437

units ?(round your response to the nearest whole? number).

?b) Which? supplier, based on all options with regard to? discounts, should be? used?

Allen Mfg.

?c) What is the optimal order quantity and total annual cost of? ordering, purchasing, and holding the? component?

The optimal order quantity is

?????

with a total cost of

???

?(round your responses to the nearest whole? number).

Answer 1

Optimal Order Qty	41943
Cost for The Year	$    13,29,37,327.07

Annual Demand	8708700
Ordering Cost	$                  5,555.00
Holding Cost (Per Unit)	$                        55.00
EOQ
EOQ= 4193
	Allen	Baker
Unit Price	$                        15.00	$                        15.10
EOQ	41943	41943
A. Total Ordering Cost ( (Annual Demand / EOQ)*Ordering Cost)	$          11,53,394.57	$          11,53,394.57
B. Purchasing Cost	$    13,06,30,500.00	$    13,15,01,370.00
C. Holding Cost (EOQ/2)* Holding Cost Per Unit	$          11,53,432.50	$          11,53,432.50
Total Annual Cost (A+B+C)	$    13,29,37,327.07	$    13,38,08,197.07
Optimal Order Qty	41943
Cost for The Year	$    13,29,37,327.07