A solar panel manufacturer uses a specific type of silicon photovoltaic (PV) cell in production. Demand...

 

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A solar panel manufacturer uses a specific type of silicon photovoltaic (PV) cell in production. Demand for this PV cell has a constant rate of 40 per month. The company should decide among three sourcing options for the PV cell: supplier X, supplier Y, or in-house production. Supplier X offers an all-units discount schedule for its PV cells: It charges $50 for each cell if the order size is less than 500, $45 for each cell if the order size is between 500 and 1000, and $40 for each cell if the order size is greater than or equal to 1000. The order setup cost required by this supplier is $2000. • Supplier Y offers an incremental discount schedule for its PV cells: It charges $50 for each cell if the order size is less than or equal to 300, $40 for each cell purchased beyond 300 if the order size is between 301 and 600, and $30 for each cell purchased beyond 600. The order setup cost required by this supplier is $1000. • For the option of in-house production, it costs $800 to initiate a production run and each cell costs the company $48 to manufacture. The company has the capacity to produce 50 cells per month. The inventory holding costs are based on a 25 percent annual interest rate. (a) (20 points) If the company works with supplier X, what is the optimal order quantity for PV cells? (b) (20 points) If the company works with supplier Y, what is the optimal order quantity for PV cells? (c) (15 points) If the company prefers in-house production, what is the optimal size of each production run for PV cells? (d) (15 points) Calculate the optimal total annual cost for each option. Which option should the company choose? (e) (30 points) Suppose that the manufacturer does not want to keep any PV cell in inventory for more than 1.5 years. Answer the questions (a)-(d) in this case. Which option should the company choose in this case? A solar panel manufacturer uses a specific type of silicon photovoltaic (PV) cell in production. Demand for this PV cell has a constant rate of 40 per month. The company should decide among three sourcing options for the PV cell: supplier X, supplier Y, or in-house production. Supplier X offers an all-units discount schedule for its PV cells: It charges $50 for each cell if the order size is less than 500, $45 for each cell if the order size is between 500 and 1000, and $40 for each cell if the order size is greater than or equal to 1000. The order setup cost required by this supplier is $2000. • Supplier Y offers an incremental discount schedule for its PV cells: It charges $50 for each cell if the order size is less than or equal to 300, $40 for each cell purchased beyond 300 if the order size is between 301 and 600, and $30 for each cell purchased beyond 600. The order setup cost required by this supplier is $1000. • For the option of in-house production, it costs $800 to initiate a production run and each cell costs the company $48 to manufacture. The company has the capacity to produce 50 cells per month. The inventory holding costs are based on a 25 percent annual interest rate. (a) (20 points) If the company works with supplier X, what is the optimal order quantity for PV cells? (b) (20 points) If the company works with supplier Y, what is the optimal order quantity for PV cells? (c) (15 points) If the company prefers in-house production, what is the optimal size of each production run for PV cells? (d) (15 points) Calculate the optimal total annual cost for each option. Which option should the company choose? (e) (30 points) Suppose that the manufacturer does not want to keep any PV cell in inventory for more than 1.5 years. Answer the questions (a)-(d) in this case. Which option should the company choose in this case?

Answer rating: 100% (QA)

a To find the optimal order quantity for PV cells when working with supplier X we need to find the point where the marginal cost of ordering from supp... View the full answer