Question: Question 6 Problem Statement: Ontario Power Generation (OPG) is undergoing refurbishment and the supply chain group is procuring a critical gasket. During the process of

Question 6 Problem Statement: Ontario Power

Question 6 Problem Statement: Ontario Power Generation (OPG) is undergoing refurbishment and the supply chain group is procuring a critical gasket. During the process of refurbishment, the maintenance team expects a demand of 700 gaskets per month. As per the procurement process, two vendors have been identified. From either, the ordering cost is $50, and the annual holding cost per gasket is $5. Also, the price list for the gasket is provided in the table below. Vendor 1 Quantity Unit Price 1-499 $16.00 500-999 15.50 1000+ 15.00 Vendor 2 Quantity Unit Price 1-399 $16.10 400-799 15.60 800+ 15.10 Using the information provided above, answer the following questions: a) Calculate the economic order quantity (2 points] b) From which vendor is the optimal order quantity and what is the total annual inventory cost? You must show all relevant calculations to justify full marks. [9 points)

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