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 of the part, Kramer and Sunrise:

Which supplier will provide the lowest annual total costs?

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Supplier Kramer Sunrise Freight Costs Shipping Quantity (Q) 2,000 $30,000 $28,000 10,000 $20,000 $18,000 Price/Unit (p) $5.00 $4.90 Carrying Lead Time (4) Administrative Cost/Unit (H) (days) Costs $1.00 5 $10,000 $0.98 9 $11,000