Universal Technologies, Inc. has identified two qualified vendors with the capac
ID: 3266855 • Letter: U
Question
Universal Technologies, Inc. has identified two qualified vendors with the capacity to supply certain of its electronic components. For the coming year, Universal has estimated its volume requirements for these components and has obtained price-break schedules from each vendor. Universal's engineers have also estimated each vendor's maximum capacity for producing these components, on the basis of available information about equipment in use and labor policies in effect. Finally, because of its limited history with Vendor A, Universal has adopted a policy that permits no more than 60 % of its total unit purchases on those components to come from vendor A. a. What is the minimum total cost for Universal's purchases? b. In the optimal solution to part (a), which purchases are made at discounted prices? In problem 7, suppose that vendor A provides a new price-discount schedule for component 3. This one is an incremental discount as opposed to an all-units discount, as follows: Unit price = $60 on all units up to 1000 Unit price = $56 an the next 1000 units Unit price = $51 on the next 500 units. a. What is the minimum total cost for Universal's purchases? b. In the optimal solution to part (a), which purchases are made at discounted prices?Explanation / Answer
Maximum purchases from Vendor A = 60% of 4000=2400
Product
Vendor A
Vendor B
Total Cost
1
500*214 (Discounted)
107000
2
1000*115(Discounted)
115000
3
600*60(NO discount)
1900*52(Discounted)
134800
Total Units
1600<2800(Capacity LIMIT)
2400=2400
356800
Explanation :
Product 1 can be bought entirely form Vendor B at 500*214 = $107000
Product 2, entirely from vendor A, at 1000*115= $115000
Product 3, as follows:
(2400-500 = 1900) units from Vendor B at 1900*52= $98800
(2500-1900 = 600) units from Vendor A at 600*60= $36000
MTC, Minimum Total Cost = 107000+115000+98800+36000 = $356800
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Product
Vendor A
Vendor B
Total Cost
1
500*214 (Discounted)
107000
2
1000*115(Discounted)
115000
3
600*60(NO discount)
1900*52(Discounted)
134800
Total Units
1600<2800(Capacity LIMIT)
2400=2400
356800
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