Question: A company will begin stocking remote control devices. Expected monthly demand is 800 units. The controllers can be purchased from either supplier A or supplier

A company will begin stocking remote control devices. Expected monthly demand is 800 units. The controllers can be purchased from either supplier A or supplier B or supplier C. Their price lists are as follows:

SUPPLIER A . SUPPLIER B . SUPPLIER C

Quantity Unit Price Quantity Unit Price Quantity Unit Price

1199 $14.00 1149 $14.10 1124 $14.20

200499 13.80 150349 13.90 125499 14.00

500+ 13.60 350+ 13.70 500+ 13.40

Ordering cost is $25 and annual holding cost is 20% of unit price per unit.

(a) What are the optimal total annual costs in the case of Supplier A?

(b) What are the optimal total annual costs in the case of Supplier B?

(c ) What are the optimal total annual costs in the case of Supplier C?

(d ) What should be the optimal order quantity and which supplier must be chosen?

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