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

  1. 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. Their price lists are as follows:

Supplier A

Quantity

Unit Price*

1 - 199

$14.00

200 499

$13.80

500 - 1000

$13.60

Supplier B

Quantity

Unit Price*

1 - 149

$14.10

150 - 349

$13.90

350 - 600

$13.70

The fixed ordering cost for Supplier A is $400 and has a capacity to supply up to 1000 units per month. The fixed ordering cost for Supplier B is $300 an has a capacity to supply up to 600 units.

The objective is to minimize the total cost of purchasing (fixed plus variable costs).

  1. Formulate this problem as a linear integer programming problem and find an optimal solution using Excel solver. (Assume an all-units discount offering from the suppliers)
  2. Formulate this problem as a linear integer programming problem and find an optimal solution using Excel solver. (Assume a graduated discount offering from the suppliers)

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