IE 375 - Production Planning Homework Assignment 3 - November 13 A washing machine producer requires a specific type of water pump in production. Demand for the water pump has a constant rate of 200 per month. The company should decide among three sourcing options for the water pump: supplier A, supplier B, or in-house production. - Supplier A offers an all-units discount schedule for its pumps: It charges $250 for each pump if the order size is less than 100,$220 for each pump if the order size is between 100 and 200 , and $190 for each pump if the order size is greater than 199 . The order setup cost required by this supplier is $300. - Supplier B offers an incremental discount schedule for its pumps: It charges $250 for each pump if the order size is less than or equal to 100,$190 for each pump purchased beyond 100 if the order size is between 101 and 200 , and $130 for each pump purchased beyond 200 . The order setup cost required by this supplier is $200. - For the option of in-house production, it costs $750 to initiate a production run and each pump costs the company $150 to manufacture. The company has the capacity to produce 300 pumps per month. The inventory holding costs are based on a 20 percent annual interest rate. (a) (20 points) If the company works with supplier A, what is the optimal order quantity for pumps and how many times should the company order in a year? (b) (20 points) If the company works with supplier B, what is the optimal order quantity for pumps and how many times should the company order in a year? (c) (15 points) If the company prefers in-house production, what is the optimal size of production run for pumps and how many times should the manufacturing facility be set up for production of pumps in a year? (d) (15 points) Calculate the optimal total annual cost for each option. Which option should the company choose? (e) (30 points) Suppose that the company wants to hold no more than 150 pumps in its inventory at any time. Recalculate the optimal order quantity and the optimal total annual cost for each option in this case