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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 $12 $13 $14
2 $10 $11 $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 600 1000 800
If the Edwards production plan for the next period includes 1000 units of component 1 and 800 units of component 2, how many units of each component should be ordered from each supplier? What is the total purchase cost for the components?
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Develop a report for Figi Fabricating that will address the question of whether the company should continue to purchase the part from the supplier or begin to produce the part itself.
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