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M. P. VanOyen Manufacturing has gone out on bid for a regulator component. Expected demand is 675 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 ?$50?, and annual holding cost per unit is ?$4.
Allen Mfg.
Baker Mfg.
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
b) which supplier should be used?
c) what is the optimal order quantity?
d) total cost?
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