Question: b. Before management could make a decision, another option became available. Zelda Tools offered the tool set for only $7.00; however, the lead time is

b. Before management could make a decision, another option became available. Zelda Tools offered the tool set for only $7.00; however, the lead time is longer than the other two suppliers. Zelda is a new supplier and has not been in the industry very long. Additional data for Zelda are in the table below:

Annual Freight Costs

Shipping Quantity (Q)

Supplier

10,000

25,000

50,000

Price/Unit (p)

Annual HoldingCost/Unit (H)

Lead Time (L) (wks)

Annual Administrative Cost

Zelda

$45,000

$28,000

$17,000

$7.00

$1.40

9

?

Management has begun to assess the administrative costs to manage the contract with Zelda. What is the lowest level of administrative costs at which Weekend Projects would be indifferent between using Zelda versus the option you chose in part (a)?

Weekend Projects would be indifferent if administrative costs are _________(Enter your response as an integer.)

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