What are the total annual costs if MO Auto is the supplier selected?

MARKETING 2018
19th Edition
ISBN:9780357033753
Author:Pride
Publisher:Pride
Chapter15: Retailing, Direct Marketing, And Wholesaling
Section15.1: L.l.bean: Open 24/7, Click Or Brick
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The Burdell Wheel and Tire Company assembles tires to wheel rims for use on cars during the manufacturing of vehicles. Burdell
wants to locate a low-cost supplier for the tires he uses in his assembly operation. The supplier will be selected based on the total
annual cost to supply Burdell's needs. Burdell's annual requirements are for 25,000 tires, and the company operates 250 days a
year. The following data are available for two suppliers being considered.
SUPPLIER
KS TIRE
MO AUTO
SHIPPING
QUANTITY PER
SHIPMENT
2,000
1,000
ANNUAL
SHIPPING
COSTS
$18,000
$30
$25,000 $29
PRICE/
TIRE (p)
INVENTORY
HOLD COSTS (H0
$6.00
$5.80
What are the total annual costs if MO Auto is the supplier selected?
LEAD TIME
(L) (DAYS)
6
4
ADMIN
COSTS
$15,000
$18,000
Transcribed Image Text:The Burdell Wheel and Tire Company assembles tires to wheel rims for use on cars during the manufacturing of vehicles. Burdell wants to locate a low-cost supplier for the tires he uses in his assembly operation. The supplier will be selected based on the total annual cost to supply Burdell's needs. Burdell's annual requirements are for 25,000 tires, and the company operates 250 days a year. The following data are available for two suppliers being considered. SUPPLIER KS TIRE MO AUTO SHIPPING QUANTITY PER SHIPMENT 2,000 1,000 ANNUAL SHIPPING COSTS $18,000 $30 $25,000 $29 PRICE/ TIRE (p) INVENTORY HOLD COSTS (H0 $6.00 $5.80 What are the total annual costs if MO Auto is the supplier selected? LEAD TIME (L) (DAYS) 6 4 ADMIN COSTS $15,000 $18,000
O
$791,600
$792,600
$773,220
$769,320
Transcribed Image Text:O $791,600 $792,600 $773,220 $769,320
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