Solved Problem 1

  1. Eagle Electric Repair is a repair facility for several major electric appliance manufacturers. Eagle wants to find a low-cost supplier for an electric relay switch used in many appliances. The annual requirements for the relay switch (D) are 100,000 units. Eagle operates 250 days a year. The following data are available for two suppliers of the part, Kramer and Sunrise:

    MyLab Operations Management Video

    Supplier

    Freight Costs Shipping Quantity (Q)

    Price/Unit (p)

    Carrying Cost/Unit (H )

    Lead Time (L) (days)

    Administrative Costs

    2,000

    10,000

    Kramer

    $30,000

    $20,000

    $5.00

    $1.00

    5

    $10,000

    Sunrise

    $28,000

    $18,000

    $4.90

    $0.98

    9

    $11,000

    Which supplier will provide the lowest annual total costs?

Solution

  1. The daily requirements ...

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