Question: Three vendors are proposing good unit prices t o a retailer according t o the following quantity discount model: Vendor Number o f units t

Three vendors are proposing good unit prices to a retailer according to the following quantity discount model:
Vendor
Number of units to buy
Unit price ($)
A
1-199
65
B
200-599
59
C
600+
56
The setup cost (S) and the holding cost (H) are $275 per order and $14 per unit, respectively. Annual demand (D) for these units is set at700 per year. Accordingly, the total cost (TC)of inventory (including the price of all the inventoried units) for Vendor A,B and C are about $??????, $??????, and $ ?()???thousand dollars, respectively. This makes Vendor ?()?? the best (lowestcost) deal. Hint: This is a quantity discount model. Compute first the economic order quantity Q. Then use the equation for the total cost TCas a function of setup cost, holding cost and dollar value of the inventory for each A,B and C choices.

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