The local hospital is deciding which supplier to go with for purchasing bandages for the upcoming...

Transcribed Image Text:

The local hospital is deciding which supplier to go with for purchasing bandages for the upcoming year. The hospital needs 500,000 bandages a year and has an annual holding cost of 10% of the cost of inventory. There are three suppliers to choose from with the following costs. Supplier options A B C Supplier ordering costs $50 $60 $20 Order size Unit cost n/a $0.25 55K+ $0.20 50K+ $0.15 A. What is the optimal order quantity per order from each supplier? B. What is the total annual inventory cost from each supplier? C. Which supplier should the hospital choose to order from and how large will their order size be? The local hospital is deciding which supplier to go with for purchasing bandages for the upcoming year. The hospital needs 500,000 bandages a year and has an annual holding cost of 10% of the cost of inventory. There are three suppliers to choose from with the following costs. Supplier options A B C Supplier ordering costs $50 $60 $20 Order size Unit cost n/a $0.25 55K+ $0.20 50K+ $0.15 A. What is the optimal order quantity per order from each supplier? B. What is the total annual inventory cost from each supplier? C. Which supplier should the hospital choose to order from and how large will their order size be?