PLEASE HELP WITH ANSWER FOR B X Problem 5 Question Help $1.62 $1.62 $15,000 $15,

Question

PLEASE HELP WITH ANSWER FOR B

X Problem 5 Question Help $1.62 $1.62 $15,000 $15,000 $40,000 $26,000 $19,000 $8.10 Bradley Alexander $30,000 $27,000 $19,000 $8.10 4 7 a. Which of the two suppliers would provide the lowest annual cost to Weekend Projects? What shipping quantity would you suggest? Using Bradley and a shipping quantity of 25,000 units is the lowest cost alternative, with annual total costs to Weekend Projects of $884,210. (Enter your response as an integer.) b. Before management could make a decision, another option became available. Zelda Tools offered the tool set for only $8.00; however, the lead time is longer than the other two suppliers. Zelda is a new supplier and has not been in the industry very long. Additional data for Zelda are in the table below: Annual Freight Costs Shipping Quantity (Q) Price/Unit Annual Holding Lead Time (L) Annual Administrative Supplier Zelda Cost/Unit (H) $1.60 (wks) 8 10,000 25,000 50,000 Cost $45,000$28,000 $18,000 $8.00 Management has begun to assess the administrative costs to manage the contract with Zelda. What is the lowest level of administrative costs at which Weekend Projects would be indifferent between using Zelda versus the option you chose in part (a)? Weekend Projects would be indifferent if administrative costs are $.(Enter your response as an integer.)

Explanation / Answer

Expected annual sales, D = 100,000

b. Zelda

Total annual cost of shipping quantity (Q) 25000 = 8*100000 + 28000 + (25000/2)*1.6 + 100000*1.6*8/50 + Adm cost

= 873,600 + Adm cost

For indifference point, total cost of Zelda must be at most equal to that of Bradley

So, 873600 + Adm cost = 884210

Therefore, Administrative costs = 884210 - 873600 = $ 10,610

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.