problem 16-12

Problem 16-12 (Algo) Your company assembles five different models of a motor scooter that is sold in specialty stores in the United States. The company uses the same engine for all five models. You have been given the assignment of choosing a supplier for these engines for the coming year. Due to the size of your warehouse and other administrative restrictions, you must order the engines in lot sizes of 700 units. Because of the unique characteristics of the engine, special tooling is needed during the manufacturing process for which you agree to reimburse the supplier. Your assistant has obtained quotes from two reliable engine suppliers and you need to decide which to use. The following data have been collected: Requirements (annual forecast) Weight per engine Order processing cost Inventory carry cost 8,400 units 25 pounds 180 per order 20 percent of the average value of inventory per year $ Note Assume that half of lot size is in Inventory on average (700/2 = 350 units) Two qualified suppliers have submitted the following quotations: ORDER QUANTITY 1 to 1,499 units/order 1,500 to 2,999 units/order 3,000 + units/order Tooling costs Distance SUPPLIER 1 UNIT PRICE $ 672 660 534 $24,889 130 miles SUPPLIER 2 UNIT PRICE $ 666 666 530 $22,100 100 miles Your assistant has obtained the following freight rates from your carrier Truckload (42,000 lbs. each load): Less-than-truckload: $0.80 per ton-mile $1.20 per ton-mile Note: Per ton-mile = 2,000 lbs. per mile. a-1. Calculate the total cost for each supplier. (Round your answers to the nearest whole number.) Supplier 1 Supplier 2 Total cost 7 of 10 RE