Lenovo needs to source the hexa-core processors used in the production of Thinkpad X1 Yoga laptops. Lenovo requires these processors at a fairly steady rate of 45 per month. Lenovo should decide among two suppliers having different price schedules for these processors.

Supplier A offers an all-units discount schedule for its processors: It charges $350 for each processor if the order size is less than 25, $315 for each processor if the order size is between 25 and 49, and $280 for each processor if the order size is greater than 49. The order setup cost required by this supplier is $100.

Supplier B offers an incremental discount schedule for its processors: It charges $350 for each processor if the order size is less than or equal to 25, $300 for each processor purchased beyond 25 if the order size is between 26 and 50, and $250 for each processor purchased beyond 50. The order setup cost required by this supplier is $40.

The inventory holding costs are based on a 20 percent annual interest rate.

Which supplier should Lenovo choose and why?