Question

Edwards Manufacturing Company purchases two component parts from three different suppliers. The suppliers have limited capacity, and no one supplier can meet all the company’s needs. In addition, the suppliers charge different prices for the components. Component price data (in price per unit) are as follows:

	Supplier
Component	1	2	3
1	$10	$14	$10
2	$16	$12	$10

Each supplier has a limited capacity in terms of the total number of components it can supply. However, as long as Edwards provides sufficient advance orders, each supplier can devote its capacity to component 1, component 2, or any combination of the two components, if the total number of units ordered is within its capacity. Supplier capacities are as follows:

Supplier	1	2	3
Capacity	650	925	800

If the Edwards production plan for the next period includes 1025 units of component 1 and 750 units of component 2, what purchases do you recommend? That is, how many units of each component should be ordered from each supplier? Round your answers to the nearest whole number. If your answer is zero, enter "0".

	Supplier
	1	2	3
Component 1
Component 2

What is the total purchase cost for the components? Round your answer to the nearest dollar.

Answer 1

Answer:

Edward Manufacturing Company purchases two component parts from three different suppliers.

Method for solving without solver is as below

Supplier	1	2	3
Capacity	550	925	800
Rate - C1	11	12	15
Rate - C2	11	14	11

We will choose the low price suppliers to meet the demand.Hence we will see that

For component - 1, it has low prices from supplier -1 and then higher for supplier -2 and then highest for supplier -3. We try to purchase the demand of component 1 from supplier 1 and supplier 2.as it will make lowest possible cost impact.

For component -2 , we see that price is low for supplier-1 and supplier -3, then highest for supplier -2 The supplier 3 has capacity higher than the demand for component 2, hence we will purchase all quantity from supplier 3. as it will make lowest cost impact to the business.

The purchase plan is as below

Demand		Sourcing plan
		Qty from S-1	Amount-S1	Qty from S-2	Amount-S1	Qty from S-3	Amount-S1	Total
Demand C1	975	550	6050	425	5100	0	0	11
Demand C2	775	0	0	0	0	775	8525	85
							Total	15

Purchase Plan	Suppliers Qty
	1	2	3
Component 1	550	425	0
Component 2	0	0	775
Purchase Plan	Suppliers-Cost			Total
	1	2	3
Component 1	6050	5100	0	11150
Component 2	0	0	8525	8525

Solver technique

One need to arrange the data in the below format as

	Comp 1	Comp 2
Supplier rate
Supplier-1	11	11
Supplier-2	12	14
Supplier-3	15	11

			Capacity
Supplier-1	1	1	550
Supplier-1	1	1	925
Supplier-1	1	1	800
Demand	975	775
function	74

The function cell need to be minimized by using the solver.

Add the constraints as mentioned in the table above for suppliers and demands.

Then the solver can give the result as below

	Comp-1	Comp-1
Supplier rate
Supplier 1	11	11
Supplier 2	12	14
Supplier 3	15	11
			Capacity
Supplier 1	550	0	550
Supplier 2	425	0	925
Supplier 3	0	775	800
Demand
function	19675