Question: An assembler orders two components from a single supplier. The assembler uses 2 5 0 units of the first component and 1 2 5 0

An assembler orders two components from a single supplier. The assembler uses 250 units of the
first component and 1250 units of the second component. The fixed transportation cost is $400.
Also, the inspection and sorting costs is $100 for each component. The unit purchasing cost is
$250 for the first component and $350 for the second component. The carrying cost is 20%. The
assembler is trying to come up with an ordering plan that minimizes total holding and ordering
costs. There are two possible options: (1) The assembler order each component independently and
(2) The assembler order jointly but not every order contains every component; that is, each order
contains a selected subset of the components. Calculate the average number of orders and order
quantity for each component for both two options. Also, calculate the total holding and ordering
costs for both options. Which option would you choose?

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