Find the cost of order processing for each case

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Reference no: EM131463342

Question: A large producer of household products purchases a glyceride used in one of its deodorant soaps from outside of the company. It uses the glyceride at a fairly steady rate of 40 pounds per month, and the company uses a 23 percent annual interest rate to compute holding costs. The chemical can be purchased from two suppliers, A and B. A offers the following all-units discount schedule:

Order Size Price per Pound

0 ≤ Q < 500 $1.30

500 ≤ Q < 1,000 1.20

1,000 ≤ Q 1.10

whereas B offers the following incremental discount schedule: $1.25 per pound for all orders less than or equal to 700 pounds, and $1.05 per pound for all incremental amounts over 700 pounds. Assume that the cost of order processing for each case is $150. Which supplier should be used?

Reference no: EM131463342

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