Question

The business manager of an RSO has a choice of purchasing T-shirts for 500 students from two suppliers. Alpha T offers the shirt to be acquired at P300 each with print 500 pieces and silk screen cost of P1,000 for 500 pieces. If the RSO will buy less than 500 pieces, it will be charged at P315each. Beta T, another supplier offers the T-shirt at P187 each, charges printing at P10,000 at a higher level of printing technology for every 300 pieces, and P75/shirt for ink and labor. Record shows that sales come from 75% of the students buy T-shirts.

If only 80% of the students are targeted to serve, which supplier will you choose?

Answer 1

Students Targeted for sale = 80%*500 students = 400 students

For Alpha T, Cost = (315p * 400 units) + (1000p * 400 units) = 5,26,000p

For Beta T, Cost = (187p * 400 units) + (1000p*300units) + ( 1000p* 100/300units) + (75p* 400 units)

= 74,800 + 300000 + 333.33 + 30000

= 4,05,133.33p

Since cost for T shirts targeted to 80% students is lower with Beta T (405133.33p ) is less than 526000p. So, we buy from Beta T.

NOTE : Since we choose to target 80% students, so we will buy 80%*500 = 400 units instead of 500 units.

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