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

13

$3,000

Evan & Sons

$4,000

$5.00

$1.00

17

$4,000

Farley, Inc.

$3,500

$5.05

$1.01

14

$6,000

Part 2

a. Which of the three suppliers will provide the lowest annual cost to Wanda Lux?

Using Evan/Farley/Dover 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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