5. American Machine Corp buys three components from a local wholesaler. The annual demand for components A, B, and C is 6000, 8000, and 3000 units respectively. The agreed purchase price is $10, $8, and $12 per unit for A, B, and C respectively for each product. The holding cost is estimated to be 25% per year. The ordering cost consists of handling and trucking costs. The handling cost is $100 for each type of component regardless of the number of items ordered. In addition to the handling cost, American Machine corp has to pay a trucking cost of $500 for each delivery regardless of the total number of components in the order. Currently, all three items are being ordered independently using EOQ models. A proposal has been made to combine the ordering of the three items to save on trucking costs. Analyze the current and the prosed scenario and show the results below. PLEASE POST THE WHOLE EXCEL SOLUTION

Input Data:

	A	B	C	Combined Order
Demand items/year				No Change
Item Cost in $/item				No Change
% Holding Cost/year				No Change
Ordering Cost $/order

Current Scenario Analysis (Independent ordering):

	A	B	C	Total
# of Orders/ year
Economic Order Quantity
Holding Cost in $/year
Ordering Cost in $/Year
Total Cost of ordering Independently

Proposed Scenario Analysis (Joint ordering):

	A	B	C	Total
# of Orders/ year
Economic Order Quantity
Holding Cost in $/year
Ordering Cost in $/Year
Total Cost of ordering Jointly

Total cost savings due to ordering jointly: __________________________________

Can you estimate the total savings in trucking costs? Why is this different from total savings?