Questions: a) (shown in the screenshot) b) Given Wanda\'s criteria and weighting
ID: 351069 • Letter: Q
Question
Questions:
a) (shown in the screenshot)
b) Given Wanda's criteria and weighting system, which supplier should Wanda award the contract to?
Thank you very much!
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 Freight Price/Unit Annual Holding Costs $4,500 $4,000 $3,500 Annual Administrative Costs $5,000 $6,000 $3,000 Lead Time (L) (days) Supplier Dover Plastics Evan & Sons Farley, Inc $5.15 $5.00 $5.05 Cost/Unit (H) $1.03 $1.00 $1.01 20 13 a. Which of the three suppliers will provide the lowest annual cost to Wanda Lux? . (Enter your response Using | | is the lowest cost alternative, with annual total costs to Wanda Lux of $1 rounded to the nearest whole number.)Explanation / Answer
Annual cost = Annual freight costs + Annual administrative cost + Price per unit * Annual demand + (Shipping quantity Q / 2) * Annual holding cost per unit + Annual demand * (Lead time/250)*Annual holding cost per unit
= Annual freight costs + Annual administrative cost + p*D + (Q/2)*H + D*(L/250)*H
Annual cost of Dover Plastics = 4500 + 5000 + 5.15*40000 + (20000/2)*1.03 + 40000*(14/250)*1.03
= $ 228,107
Annual cost of Evan & Sons = 4000 + 6000 + 5.00*40000 + (20000/2)*1.00 + 40000*(20/250)*1.00
= $ 223,200
Annual cost of Farley, Inc. = 3500 + 3000 + 5.05*40000 + (20000/2)*1.01 + 40000*(13/250)*1.01
= $ 220,701
Using __Farley, Inc__ is the lowest cost alternative, with annual total costs to Wanda Lux of $ __220,701__
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