How fruit can minimize the penalty associated

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Reference no: EM132275110

Fruit Computer Company is ready to make its annual purchase of computer chips. Fruit can purchase chips (in lots of 100) from three suppliers. Each chip’s quality is rated as excellent, good, or mediocre. During the coming year, Fruit needs 5000 excellent chips, 3000 good chips, and 1000 mediocre chips. The characteristics of the chips purchased from each supplier are shown in the file P16_03.xlsx. Each year, Fruit has budgeted $28,000 to spend on chips. If Fruit does not obtain enough chips of a given quality, it can specialorder additional chips at $10 per excellent chip, $6 per good chip, and $4 per mediocre chip. Fruit assesses a penalty of $1 for each dollar it goes over the annual budget (in payments to suppliers). Determine how Fruit can minimize the penalty associated with meeting the annual chip requirements.

Reference no: EM132275110

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