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Part $1$

Polar Bear Computer Co$.$ outsources the production of motherboards for its computers. It is currently deciding which of two suppliers to$$ use: Alpha or Beta. Due to differences in the product failure rates in the two$$ companies, $5\%$ of motherboards purchased from Alpha will be inspected and $20\%$ of motherboards purchased from Beta will be inspected. The following data refer to costs associated with Alpha and Beta$$: Requirements

$1.$ What is the relevant cost of purchasing from Alpha and Beta$?$

$2.$ What fAlpha

Beta

Number of orders per year

$60$

$60$

Annual motherboards demanded

$19,000$

$19,000$

Price per motherboard

$$92$

$$87$

Ordering cost per order

$$9$

$$6$

Inspection cost per unit

$$4$

$$4$

Average inventory level

$300$ units

$300$ units

Expected number of stockouts

$300$

$900$

Stockout cost $($cost of rush order$)$ per stockout

$$2$

$$2$

Units returned by customers for replacing motherboards

$60$

$600$

Cost of replacing each motherboard

$$23$

$$23$

Required annual return on investment

$10\%$

$10\%$

Other carrying cost per unit per year

$$2\mathrm{.}70$

$$2\mathrm{.}70$actors other than cost should Polar Bear $$consider$?$