Reference no: EM132952228

A yogurt manufacturer experiences annual demand of 5000 units, has a setup cost of $100, and a holding cost per unit of 20% of the price of the items held in inventory.

The company can order from three different suppliers, each offering a different quantity discount schedule, as detailed in the tables below.

Supplier 1:
Quantity
1 to 200
201 to 399
400 and up
Price
110 per unit
100 per unit
90 per unit

Supplier 2:
Quantity
1 to 299
300 to 499
500 and up
Price
120 per unit
100 per unit
80 per unit

Supplier 3:
Quantity
1 to 199
200 to 299
300 and up
Price
95 per unit
90 per unit
85 per unit

1. What is the optimal order quantity for each quantity discount schedule?

2. What are the corresponding annual numbers of orders, average inventory levels, total ordering costs, total holding costs, and total costs of inventory?

2. Which supplier should the company order from?