Eagle Electric Repair is a repair facility for several major electric appliance manufacturers. Eagle wants to find a low-cost supplier for an electric relay switch used in many appliances. The annual requirements for the relay switch (D) are 100,000 units. Eagle operates 250 days a year. The following data are available for two suppliers, Kramer and Sunrise, for the part: Supplier Freight CostsShipping Quantity (Q ) Price/Unit (p) Carrying Cost/Unit (H ) Lead Time (L) (days) Administrative Costs 2,000 10,000 Kramer $30,000 $20,000 $5.00 $1.00 5 $10,000 Sunrise $28,000 $18,000 $4.90 $0.98 9 $11,000 Which supplier will provide the lowest annual total costs?
Eagle Electric Repair is a repair facility for several major electric appliance manufacturers. Eagle wants to find a low-cost supplier for an electric relay switch used in many appliances. The annual requirements for the relay switch (D) are 100,000 units. Eagle operates 250 days a year. The following data are available for two suppliers, Kramer and Sunrise, for the part: Supplier Freight CostsShipping Quantity (Q ) Price/Unit (p) Carrying Cost/Unit (H ) Lead Time (L) (days) Administrative Costs 2,000 10,000 Kramer $30,000 $20,000 $5.00 $1.00 5 $10,000 Sunrise $28,000 $18,000 $4.90 $0.98 9 $11,000 Which supplier will provide the lowest annual total costs?
Purchasing and Supply Chain Management
6th Edition
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Chapter2: The Purchasing Process
Section: Chapter Questions
Problem 1GPE
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Eagle Electric Repair is a repair facility for several major electric appliance manufacturers. Eagle wants to find a low-cost supplier for an electric relay switch used in many appliances. The annual requirements for the relay switch (D) are 100,000 units. Eagle operates 250 days a year. The following data are available for two suppliers, Kramer and Sunrise, for the part:
Supplier | Freight Costs Shipping Quantity (Q ) |
Price/Unit (p) | Carrying Cost/Unit (H ) | Lead Time (L) (days) | Administrative Costs | |
2,000 | 10,000 | |||||
Kramer | $30,000 | $20,000 | $5.00 | $1.00 | 5 | $10,000 |
Sunrise | $28,000 | $18,000 | $4.90 | $0.98 | 9 | $11,000 |
Which supplier will provide the lowest annual total costs?
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