Question: Allen Rench (A.R.) electronics sources two specialized electronic chips, called XR1 and TP4, from Japan from 2 medium sized suppliers (each chip has its own
Allen Rench (A.R.) electronics sources two specialized electronic chips, called XR1 and TP4, from Japan from 2 medium sized suppliers (each chip has its own supplier). The suppliers are located in the same geographic region so transportation companies are able to pick up product from both suppliers to make one larger shipment. Each pickup costs 75$. So if A.R. orders both chips it must pay 75$+75$ = 150$ for the pickups. However if A.R. orders only 1 chip it only has to pay 75$. In addition to pickup costs, other fixed ordering costs are 249$, whether 1 chip or both chips are ordered.
The annual demand for XR1 is 13,736 units, and for TP4 is 19,953 units. The cost of XR1 is 90$ per unit, and the cost of TP4 is 28 $ per unit. The holding cost for for any product is 20% of the item cost per year.
A.R.'s policy is to always order both chips together and have transport company pick up product from both suppliers to make a combined shipment for each order placed.
What is the optimal ordering quantity for XR1? Enter your answer rounded to 2 decimal places.
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