ABA Berhad supplies ABC Berhad with 2,000 reams of paper annually for its office use. Each...

Transcribed Image Text:

ABA Berhad supplies ABC Berhad with 2,000 reams of paper annually for its office use. Each ream of paper costs RM56 to purchase. In addition, the holding cost (per ream) per year is 0.1% of the purchase price, and the ordering cost is RM30. Another supplier (BBB) offers to supply the papers for RM50 each if ABC Berhad orders at least 1,500 at a time and in multiples of 100. The charge for placing an order is RM25. Assume an annual demand of 3000 reams of paper, should the management of ABC Berhad switch to the new supplier or continue with the current supplier? Support your answer with calculations. ABA Berhad supplies ABC Berhad with 2,000 reams of paper annually for its office use. Each ream of paper costs RM56 to purchase. In addition, the holding cost (per ream) per year is 0.1% of the purchase price, and the ordering cost is RM30. Another supplier (BBB) offers to supply the papers for RM50 each if ABC Berhad orders at least 1,500 at a time and in multiples of 100. The charge for placing an order is RM25. Assume an annual demand of 3000 reams of paper, should the management of ABC Berhad switch to the new supplier or continue with the current supplier? Support your answer with calculations.