Their price lists are shown in the table Ordering cost is $55, and annual holding cost per unit is $4

M.P. VanOyen Manufacturing has gone out on bid for a regulator component. Expected demand is 725 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 $55, and annual holding cost per unit is $4

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?

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

Expert Solution

Answer: D = Demand (quantity demand per year) = average monthly demand*12= 725*12= 8700

S = Setup costs (order cost) = $55

H = Holding costs = $4 per year

EOQ, Economic order quantity = √(2SD / H) = 131.90 ~132
Supplier should be used is Allen Mfg. Because if we order 132 units, then unit price in Allen Mfg is less in the case of of 1-499.

Amanda K answered 2 years ago

Ricky Orange’s annual demand is 12 500 units. Ordering cost is RO. 100 per order. Holding...

Ricky Orange’s annual demand is 12 500 units. Ordering cost is RO. 100 per order. Holding cost is estimated at 20% of product cost which is RO. 50 per unit. The firm works for 50 weeks per year and each week has 5 days. Calculate: a) Economic order quantity. b) Number of orders to be placed per year. c) Daily usage quantity. ...

Bell Computers purchases integrated chips at $350 per chip. The holding cost is $37 per unit per year, the ordering cost is $123 per order, and sales are steady at 405 per month.

Bell Computers purchases integrated chips at $350 per chip. The holding cost is $37 per unit per year, the ordering cost is $123 per order, and sales are steady at 405 per month. The company's supplier, Rich Blue Chip Manufacturing, Inc., decides to offer price concessions in order to attract larger orders. The price structure is shown below. Rich Blue Chip's Price Structure Quantity PurchasedPrice/Unit1-99 units$350100-199 units$325200 or more units$300a) What is the optimal order quantity and the minimum annual cost for...

For a table manufacturing company, selling price for a table is $203.00 per Unit, Variable cost...

For a table manufacturing company, selling price for a table is $203.00 per Unit, Variable cost is $23.00 per Unit, rent is $4,884.00 per month and insurance is $300.00 per month. Company wants to expand its business and improve the table quality, it wants to increase the selling price for a table to $305.00 per Unit, Variable cost to $59.00 per Unit, bigger area will have rent $6,985.00 per month and insurance is $421.00 per month At what point will...

For a table manufacturing company, selling price for a table is $161.00 per Unit, Variable cost...

For a table manufacturing company, selling price for a table is $161.00 per Unit, Variable cost is $25.00 per Unit, rent is $3,531.00 per month and insurance is $285.00 per month. Company wants to expand its business and improve the table quality, it wants to increase the selling price for a table to $290.00 per Unit, Variable cost to $57.00 per Unit, bigger area will have rent $5,704.00 per month and insurance is $389.00 per month At what point will...

The frequency distribution shown in the following table lists the number of hours per day a...

The frequency distribution shown in the following table lists the number of hours per day a randomly selected sample of teenagers spent watching television. Where possible, determine what percent of the teenagers spent the following number of hours watching television. (Round your answers to one decimal place. If not possible, enter IMPOSSIBLE.) Hours per day Number of Teenagers 0 ≤ x < 1 17 1 ≤ x < 2 31 2 ≤ x < 3 24 3 ≤ x <...

Item Cost Price Per Unit (RM) % of Cost to price Total (RM) Note Per Unit...

Item Cost Price Per Unit (RM) % of Cost to price Total (RM) Note Per Unit (RM) Total (RM) Food 18.72 40% 11,232.00 1 46.80 28,080.00 40% of RM 28,080 Beverage 1.30 26% 780.00 2 5.00 3,000.00 26% of RM3,000 Hall Rental 5.00 50% 3,000.00 3 10.00 6,000.00 50% of RM6,000 AV & Equipment 4.00 50% 2,400.00 4 8.00 4,800.00 50% of RM4,800 Carpark 2.10 70% 1,260.00...

Assume you have a product with the following parameters: Annual Demand = 360 units Holding cost per year = $1.00 per unit Order cost = $100 per order

Assume you have a product with the following parameters: Annual Demand = 360 units Holding cost per year = $1.00 per unit Order cost = $100 per order a) What is the EOQ for this product?b) In addition, assume a 300-day work year, how many orders should be processed per year? c) What is the expected time between orders?

A company has a holding cost per unit of $5. Each order has a fixed cost...

A company has a holding cost per unit of $5. Each order has a fixed cost of $8 and the annual demand quantity is 150,000 units. What is the company's optimal order quantity?

Bell Computers purchases integrated chips at $350 per chip. The holding cost is $33 per unit...

Bell Computers purchases integrated chips at $350 per chip. The holding cost is $33 per unit per year, the ordering cost is $122 per order, and sales are steady, at 395 per month. The company's supplier, Rich Blue Chip Manufacturing Inc., decides to offer price concessions in order to attract larger orders. The price structure is shown below.Quantity Purchased1-99 units= $350 price/unit100-199 units= $325 price/unit200 or more units= $300 price/unita) What is the optimal order quantity and the minimum cost...

Bell Computers purchases integrated chips at ?$350 per chip. The holding cost is ?$35 per unit...

Bell Computers purchases integrated chips at ?$350 per chip. The holding cost is ?$35 per unit per? year, the ordering cost is ?$118 per? order, and sales are steady at 405 per month. The? company's supplier, Rich Blue Chip? Manufacturing, Inc., decides to offer price concessions in order to attract larger orders. The price structure is shown below. 1-99 units- $350 100-199- $325 200 or more units- $300 a. What is the optimal order quantity and the minimum annual cost...

Question