Question: Problem 7 SHOW ALL WORK Chapter 14: The Burdell Wheel and Tire Company assembles tires to wheel rims for use on cars during manufacture of
Problem 7 SHOW ALL WORK
Chapter 14: The Burdell Wheel and Tire Company assembles tires to wheel rims for use on cars during manufacture of vehicles by the automotive industry. Burdell wants to locate a low-cost supplier for the tires he uses in his assembly operation. The supplier will be selected based on total annual cost to supply Burdells needs. Burdells annual requirements are for 25,000 tires, and the company operates 250 days a year. The following data are available for two suppliers being considered.
| Supplier | Shipping Quantity | Annual Shipping Costs | Price /unit | Annual Holding Cost/unit | Lead Time (days) | Annual Administrative Cost |
| Lexington Tire | 2,000 | $18,000 | $41 | $8.20 | 7 | $14,000 |
| Irmo Auto | 1,500 | $22,000 | $40 | $8.00 | 5 | $18,000 |
Using the Total Cost Analysis for Supplier Selection, which supplier should Burdell choose? Provide details to justify your answer.
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