Question: O'Donnell & Joyce purchases components from three suppliers. Components purchased from Supplier A are priced at 7 each and used at the rate of 1
O'Donnell & Joyce purchases components from three suppliers. Components purchased from Supplier A are priced at each and used at the rate of units per month. Components purchased from Supplier B are priced at each and are used at the rate of units per month. Components pur
chased from Supplier C are priced at each and used at the rate of units per month. Currently, O'Donnell & Joyce pur chases a separate truckload from each sup plier. As part of its JIT drive, O'Donnell & Joyce has decided to aggregate purchases from the three suppliers. The trucking com pany charges a fixed cost of for the truck with an additional charge of for each stop. Thus, if O'Donnell & Joyce asks for a pickup from only one supplier, it charges ; from two suppliers, it charges ; and from three suppliers, it charges What replenishment strategy would you suggest for O'Donnell & Joyce to mini mize annual costs? Assume an annual hold ing cost of percent per year. Compare the cost of your strategy from each supplier.
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