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Question - A purchasing manager of a sports store wants to begin stocking hockey jerseys. Expected monthly demand is 800 jerseys. The jerseys can be purchased from either supplier A or supplier B. Their prices lists are as follows:
Supplier A
Supplier B
Quantity
Unit Price
1-199
$14.00
1-149
$14.10
200-499
$13.80
150-349
$13.90
500+
$13.60
350+
$13.70
Ordering cost is $40 per order and annual holding cost is 25 percent of unit price. Which supplier should be used and what order quantity is optimal?
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