Alvarez Incorporated can purchase component X from 3 potential suppliers. Supplier Acharges a fee of $6.50 per component. Supplier B charges $2100 per order plus $2.50per component ordered. Supplier C charges $4.00 per component, and requires thebuyer to pay for at least 300 components (even if the order size is less than 300).4. What is the full range of order sizes where each supplier is optimal?5. Alvarez decided to buy 1000 units of component X from supplier B. Howmuch money could the company have saved if it purchased the 1000 unitsfrom supplier C instead of supplier B?6. Next week supplier B will be running a 18% off special. What equationrepresents the new Total Cost for supplier B during the sale?Hint: plug the same number of units into both the new and the original Total Costequations. The new equation should provide a value that is 18% less than the original. Next week Supplier B will be running a 18% off special. What equationrepresents the new Total Cost for Supplier B during the sale?TCB sale = 2100 + 2.50vO TCB sale = 2100 + 0.18vO TCB saleO TCB sale = 1722 +2.32vO TCB sale = 2100 + 2.32v=1722 + 2.05v

Let, the order quantity = xSupplier A:Price per component = $6.50Total cost equation:Total cost…

Answered: Alvarez Incorporated can purchase…

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Chapter2: The Purchasing Process

Section: Chapter Questions

Problem 1GPE

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A major automobile manufacturer located in Georgetown, Kentucky, has two certified vendors that produce brake pads with the information shown below. New Albany Manufacturing is located in Columbus, Ohio, and LaPlaya Manufacturing is located in Monterrey, Mexico. The automobile assembly factory is assumed to operate 250 days per year. Certified Supplier New Albany Mfg. LaPlaya Mfg. Order Size (Q) 44,000 88,000 Price per Unit (P) Order quantity: Total procurement cost: Total management oversight cost: Total annual transportation cost: Annual order cost: Annual holding cost: Average annual pipeline inventory cost: Total supply chain costs: $15.14 $14.08 Oversight Cost per Unit (0) $0.00 $0.47 LA tA tA tA a. Use the Total Supply Chain Cost Excel template to compute the supply chain costs associated with each supplier if the annual demand is 440,000 brake pads. Do not round intermediate calculations. Round your answer to the nearest dollar. 88,000 units $ tA $ LA Transport Cost per Unit…
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