Cycle Inventory Assignment: It may be best to set up spreadsheets to compute answers to the problems below (please submit it through the Blackboard). In all problems assume that the annual holding cost is 15% of product cost (h=0.15).

1. Motor Company purchases components from three suppliers: Components from supplier Alpha cost $20 and are used at the rate of 300 units/month; components from supplier Beta cost $12 and are used at the rate of 1,000 units/month; components from supplier Gamma cost $30 and are used at the rate of 700 units/month. The trucking company is charging a fixed cost of $1,000/truck (for this exercise assume you do not need to worry about the truck capacity). Currently they purchase separate truckloads from each supplier. What is the corresponding minimal annual cost? What is the cycle inventory of each component? Show your work.

2. Motor Company is considering aggregating orders from all three suppliers. In addition to $1,000 fixed truck cost for deliveries with one pickup, the trucking company is charging $100 for each additional pickup. What is the corresponding minimal annual cost? What is the cycle inventory of each component? Show your work.