Joes Deli orders specially- made sandwich buns from two different suppliers: Gold Star Breads and Grandmas Bakery.

Joe’s Deli orders specially- made sandwich buns from two different suppliers: Gold Star Breads and Grandma’s Bakery. Joe’s Deli would like to use only one of the suppliers in the future. Due to variations in quality, Joe’s would need to inspect 30% of Gold Star’s buns and 60% of Grandma’s. The following data refer to costs associated with the two suppliers.

Required
1. What is the relevant cost of purchasing from Gold Star and Grandma’s?
2. What factors other than cost should Joe’s Deliconsider?

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Gold Star Grandma's 100 Number of orders per year Annual buns demanded Price per bun Ordering cost per order Inspection cost per bun Average inventory Expected number of stockouts Stockout cost of rush order Estimated sandwiches returned by customers because of defective buns Cost of fixing sandwiches retumed by customers because of defective buns Opportunity cost of investment Other carrying costs per bun per year 100 2,400 2,400 $2.50 $2.00 $10.00 $12.00 $0.50 $0.50 200 evel 200 10 $10,00 60 10 $3.00 100 1.50 12% $0.50 1.50 12% S 0.50