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.
LOADING...
| Supplier | Freight Costs | Price/Unit (p) | Annual Holding Cost/Unit (H) | Lead Time (L) (days) | Annual Administrative Costs |
| Dover Plastics | $3,500 | $5.10 | $1.02 | 15 | $6,000 |
| Evan & Sons | $3,000 | $5.15 | $1.03 | 18 | $3,000 |
| Farley, Inc. | $4,500 | $5.05 | $1.01 | 20 | $4,000 |
a. Which of the three suppliers will provide the lowest annual cost to Wanda Lux?
Dover
Farley
Evan
is the lowest cost alternative, with annual total costs to Wanda Lux of
$______.
(Enter your response rounded to the nearest whole number)
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