Question: This problem is based on Motorolas online method for choosing suppliers. Suppose Motorola solicits bids from five suppliers for eight products. The list price for

  1. This problem is based on Motorolas online method for choosing suppliers. Suppose Motorola solicits bids from five suppliers for eight products. The list price for each product and the quantity of each product that Motorola needs to purchase during the next year are given below. Each supplier has also submitted the percentage discount it will offer on each product. These percentages are also listed below. For example, supplier 1 offers a 7% discount on product 1 and a 30% discount on product 2.

Discount percentages (product along side, supplier along top)

Product

Reqd

List price

1

2

3

4

5

1

592

$87

1

7%

22%

25%

34%

35%

2

446

$63

2

30%

18%

18%

31%

26%

3

548

$96

3

21%

30%

34%

12%

14%

4

647

$40

4

27%

29%

30%

60%

6%

5

245

$98

5

31%

25%

10%

13%

30%

6

797

$51

6

23%

32%

15%

60%

9%

7

603

$83

7

6%

21%

18%

60%

28%

8

401

$55

8

17%

18%

6%

8%

31%

The following considerations also apply:

  • There is an administrative cost of $5000 associated with setting up a suppliers account. For example, if Motorola uses three suppliers, it incurs an administrative cost of $15,000.
  • To ensure reliability, no supplier can supply more than 80% of Motorolas demand for any product.
  • A supplier must supply an integer amount of each product it supplies.

Develop a linear integer model to help Motorola minimize the sum of its purchase and administrative costs.

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