Answer:
A)
Sup 1 $7,415,250
Sup 2 $7,394,080
I will pick supplier 2 as their total cost is lower.
With the assumption of point b:
Supplier 1 $ 7,412,612
Supplier 2 $ 7,419,296
Explanation:
We must use the values for 1 to 1,499 units as we are constrained to a maximum of 1,100 lot size.
Weight of the lot:
1,100 x 25 pounds = 27,500 we do not achieve truckload
So we use the 1.20 per ton-mile
27,500 / 2,000 = 13.75 tons
13.75 tons x $1.20 each x 100 miles x 12 per year = $23,760
13.75 tons x $1.20 each x 120 miles x 12 per year = $19,800
Order cost $230 x 12 per year = $ 2,760
![\left[\begin{array}{cccc}&$Supplier 1&$Supplier 2&$Differential\\$Demand&13200&13200&0\\$Unit Cost&553&552&-1\\$Goods cost&7299600&7286400&-13200\\$Tooling Cost&28300&24400&-3900\\$Truckload&23760&19800&-3960\\$Order Cost&2760&2760&0\\$Holding Cost&60830&60720&-110\\$Total Inventory Cost&7415250&7394080&-21170\\\end{array}\right]](https://tex.z-dn.net/?f=%5Cleft%5B%5Cbegin%7Barray%7D%7Bcccc%7D%26%24Supplier%201%26%24Supplier%202%26%24Differential%5C%5C%24Demand%2613200%2613200%260%5C%5C%24Unit%20Cost%26553%26552%26-1%5C%5C%24Goods%20cost%267299600%267286400%26-13200%5C%5C%24Tooling%20Cost%2628300%2624400%26-3900%5C%5C%24Truckload%2623760%2619800%26-3960%5C%5C%24Order%20Cost%262760%262760%260%5C%5C%24Holding%20Cost%2660830%2660720%26-110%5C%5C%24Total%20Inventory%20Cost%267415250%267394080%26-21170%5C%5C%5Cend%7Barray%7D%5Cright%5D)
Truckload: 42,000 / 25 = 1,680 units
new logistic cost:
13,200 / 1,680 = 7.85
This will mean 7 full travels and then another travel with less than full-load with As we cannot send "0.85" of a full load truck
13,200 - 1,680 x 7 = 1,440 units
Logistic cost:
42,000 / 2,000 x $0.80 each x 100 miles x 7 travels
+ 1,440 x 25 / 2000 x $1.20 each x 100 miles = 13920
42,000 / 2,000 x $0.80 each x 120 miles x 7 travels
+ 1,440 x 25 / 2000 x $1.20 each x 120 miles = 16,704
Order Cost: 8 orders x 230 = $1,840
Holding Cost: 1,680 untis / 2 x $551 or $552 x 20%
![\left[\begin{array}{cccc}&Supplier 1&Supplier 2&Differential\\$Demand&13200&13200&0\\$Unit Cost&551&552&1\\$Goods cost&7273200&7286400&13200\\$Tooling Cost&28300&24400&-3900\\$logistic cost&16704&13920&-2784\\$Order Cost&1840&1840&0\\$Holding Cost&92568&92736&168\\$Total Inventory Cost&7412612&7419296&6684\\\end{array}\right]](https://tex.z-dn.net/?f=%5Cleft%5B%5Cbegin%7Barray%7D%7Bcccc%7D%26Supplier%201%26Supplier%202%26Differential%5C%5C%24Demand%2613200%2613200%260%5C%5C%24Unit%20Cost%26551%26552%261%5C%5C%24Goods%20cost%267273200%267286400%2613200%5C%5C%24Tooling%20Cost%2628300%2624400%26-3900%5C%5C%24logistic%20cost%2616704%2613920%26-2784%5C%5C%24Order%20Cost%261840%261840%260%5C%5C%24Holding%20Cost%2692568%2692736%26168%5C%5C%24Total%20Inventory%20Cost%267412612%267419296%266684%5C%5C%5Cend%7Barray%7D%5Cright%5D)