Question 5: The demand for a product is 5000 items per year and carrying costs are 25% per year. You are considering purchase from the following three suppliers.

	Ordering Cost	Order Quantity	Unit cost
Supplier A	$200 per order	No restriction	$2 per item
Supplier B	$800 per order	At least 2500	$1.85 per item
Supplier C	$2000 per order	At least 4000	$1.60 per item

Show the total cost of using each supplier and the select the best one.

Supplier ID _____________

EOQ _________________ Quantity to be ordered _______________

Average Inventory __________ Number of orders/year ______________

Total Inventory Cost ____________ Grand Total cost ___________________

Supplier ID _____________

EOQ _________________ Quantity to be ordered _______________

Average Inventory __________ Number of orders/year ______________

Total Inventory Cost ____________ Grand Total cost ___________________

Supplier ID _____________

EOQ _________________ Quantity to be ordered _______________

Average Inventory __________ Number of orders/year ______________

Total Inventory Cost ____________ Grand Total cost ___________________

Conclusion: Order _________ units per order from Supplier _____ to minimize cost.

The lowest annual cost including item cost will be ________________