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12. Your company assembles five different models of a motor scooter that is sold in specialty stores in the United States. The company uses the same engine for all five models. You have been given the assignment of choosing a supplier for these engines for the coming year. Due to the size of your warehouse and other administrative restrictions, you must order the engines in lot sizes of 1,000 each. Because of the unique characteristics of the engine, special tooling is needed during the manufacturing process for which you agree to reimburse the supplier. Your assistant has obtained quotes from two reliable engine suppliers and you need to decide which to use. The following data have been collected: Page 467 Requirements (annual forecast) 12,000 units 22 pounds $125 per order 20 percent of the average value of inventory per year Weight per engine Order processing cost Inventory carry cost Note: Assume that half of the lot size is in inventory, on average (1,000/2500 units) Two qualified suppliers have submitted the following quotations: Supplier 1 Unit Price $510.00 500.00 Order Quantity 1 to 1,499 units/order 1,500 to 2,999 units/order 3,000+ units/order Tooling costs Distance Your assistant has obtained the following freight rates from your carrier: Truckload (40,000 lb. each load); Less-than-truckload: 490.00 $22,000 125 miles $0.80 per ton-mile $1.20 per ton-mile Supplier 2 Unit Price $505.00 $505.00 488.00 $20,000 100 miles Note: Perton-mile 2,000 lb. per mile a. Perform a total cost of ownership analysis and select a supplier. b. Would it make economic sense to order in truckload quantities? Would your supplier selection change if you ordered truckload quantities?

12. Your company assembles five different models of a motor scooter that is sold in specialty stores in the United States. The company uses the same engine for all five models. You have been given the assignment of choosing a supplier for these engines for the coming year. Due to the size of your warehouse and other administrative restrictions, you must order the engines in lot sizes of 1,000 each. Because of the unique characteristics of the engine, special tooling is needed during the manufacturing process for which you agree to reimburse the supplier. Your assistant has obtained quotes from two reliable engine suppliers and you need to decide which to use. The following data have been collected: Page 467 Requirements (annual forecast) 12,000 units 22 pounds $125 per order 20 percent of the average value of inventory per year Weight per engine Order processing cost Inventory carry cost Note: Assume that half of the lot size is in inventory, on average (1,000/2500 units) Two qualified suppliers have submitted the following quotations: Supplier 1 Unit Price $510.00 500.00 Order Quantity 1 to 1,499 units/order 1,500 to 2,999 units/order 3,000+ units/order Tooling costs Distance Your assistant has obtained the following freight rates from your carrier: Truckload (40,000 lb. each load); Less-than-truckload: 490.00 $22,000 125 miles $0.80 per ton-mile $1.20 per ton-mile Supplier 2 Unit Price $505.00 $505.00 488.00 $20,000 100 miles Note: Perton-mile 2,000 lb. per mile a. Perform a total cost of ownership analysis and select a supplier. b. Would it make economic sense to order in truckload quantities? Would your supplier selection change if you ordered truckload quantities?

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter3: Introduction To Optimization Modeling
Section3.8: A Multiperiod Production Model
Problem 22P
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Can you assist me with homework chapter 16 question 12. I am having a difficult time understanding. Thank you 

12. Your company assembles five different models of a motor scooter that is sold in specialty stores in the United States. The company uses the same engine for all five models. You have been given the assignment of choosing a supplier for these engines for the coming year. Due to the size of your warehouse and other administrative restrictions, you must order the engines in lot sizes of 1,000 each. Because of the unique characteristics of the engine, special tooling is needed during the manufacturing process for which you agree to reimburse the supplier. Your assistant has obtained quotes from two reliable engine suppliers and you need to decide which to use. The following data have been collected: Page 467 Requirements (annual forecast) 12,000 units Weight per engine 22 pounds Order processing cost $125 per order Inventory carry cost 20 percent of the average value of inventory per year Note: Assume that half of the lot size is in inventory, on average (1,000/2 = 500 units). Two qualified suppliers have submitted the following quotations: Order Quantity Supplier 1 Unit Price 1 to 1,499 units/order $510.00 1,500 to 2,999 units/order 500.00 3,000+ units/order 490.00 Tooling costs $22,000 Distance 125 miles Your assistant has obtained the following freight rates from your carrier: Truckload (40,000 lb. each load): Less-than-truckload: Note: Perton-mile 2,000 lb. per mile $0.80 per ton-mile $1.20 per ton-mile Supplier 2 Unit Price $505.00 $505.00 488.00 $20,000 100 miles a. Perform a total cost of ownership analysis and select a supplier. 6. Would it make economic sense to order in truckload quantities? Would your supplier selection change if you ordered truckload quantities?
Transcribed Image Text:12. Your company assembles five different models of a motor scooter that is sold in specialty stores in the United States. The company uses the same engine for all five models. You have been given the assignment of choosing a supplier for these engines for the coming year. Due to the size of your warehouse and other administrative restrictions, you must order the engines in lot sizes of 1,000 each. Because of the unique characteristics of the engine, special tooling is needed during the manufacturing process for which you agree to reimburse the supplier. Your assistant has obtained quotes from two reliable engine suppliers and you need to decide which to use. The following data have been collected: Page 467 Requirements (annual forecast) 12,000 units Weight per engine 22 pounds Order processing cost $125 per order Inventory carry cost 20 percent of the average value of inventory per year Note: Assume that half of the lot size is in inventory, on average (1,000/2 = 500 units). Two qualified suppliers have submitted the following quotations: Order Quantity Supplier 1 Unit Price 1 to 1,499 units/order $510.00 1,500 to 2,999 units/order 500.00 3,000+ units/order 490.00 Tooling costs $22,000 Distance 125 miles Your assistant has obtained the following freight rates from your carrier: Truckload (40,000 lb. each load): Less-than-truckload: Note: Perton-mile 2,000 lb. per mile $0.80 per ton-mile $1.20 per ton-mile Supplier 2 Unit Price $505.00 $505.00 488.00 $20,000 100 miles a. Perform a total cost of ownership analysis and select a supplier. 6. Would it make economic sense to order in truckload quantities? Would your supplier selection change if you ordered truckload quantities?
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ISBN:
9781337406659
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Cengage,
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