Question: Wanda Lux must select a supplier for a plastic bottle and proprietary dispenser for its new hair shampoo. Three suppliers have placed bids; at Wanda's
Wanda Lux must select a supplier for a plastic bottle and proprietary dispenser for its new hair shampoo. Three suppliers have placed bids; at Wanda's request, all bids are for a shipping quantity (Q) of
20,000
bottles with annual requirements (D) of
40,000
units. Wanda's factory operates 250 days a year. The following table shows each supplier's price, estimated annual freight costs, and current lead times; management has added estimates for holding costs and administrative oversight costs for each supplier.
| Supplier | Freight Costs | Price/Unit (p) | Annual HoldingCost/Unit (H) | Lead Time(L) (days) | Annual Administrative Costs |
| Dover Plastics | $3,000 | $5.15 | $1.03 | 20 | $6,000 |
| Evan & Sons | $4,500 | $5.00 | $1.00 | 18 | $3,000 |
| Farley, Inc. | $3,500 | $5.10 | $1.02 | 17 | $4,000 |
Part 2
a. Which of the three suppliers will provide the lowest annual cost to Wanda Lux?
Using
Dover
Farley
Evan
is the lowest cost alternative, with annual total costs to Wanda Lux of
$enter your response here.
(Enter your response rounded to the nearest whole number.)
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