Question

Bradley Solutions and Alexander Limited are two​ well-established suppliers of inexpensive tools. Weekend Projects is a national chain of retail outlets that caters to the occasional​ fixer-upper who would prefer to get the job done fast rather than investing in a​ well-appointed tool box. Weekend Projects wants to find a supplier for a particular tool set that promises to be a big seller. Expected annual sales are​ 100,000 units​ (D). Weekend's warehouses operate 50 weeks a year. Management collected data on the two​ suppliers, which are contained in the table​ below

	Annual Freight Costs
	Shipping Quantity​ (Q)
Supplier	10,000	25,000	50,000	​Price/Unit (p)	Annual Holding​ Cost/Unit (H)	Lead Time​ (L) (wks)	Annual Administrative Cost
Bradley	​$35,000	​$26,000	​$19,000	​$7.10	​$1.42	6	​$10,000
Alexander	​$40,000	​$27,000	​$19,000	​$7.10	​$1.42	4	​$10,000

a. Which of the two suppliers would provide the lowest annual cost to Weekend​ Projects? What shipping quantity would you​ suggest?

Using Alexander and a shipping quantity of 25,000 units is the lowest cost​ alternative, with annual total costs to Weekend Projects of ​$776110 ​(Enter your response as an​ integer.)

b. Before management could make a​ decision, another option became available. Zelda Tools offered the tool set for only ​$7.00​; ​however, the lead time is longer than the other two suppliers. Zelda is a new supplier and has not been in the industry very long. Additional data for Zelda are in the table​ below:

	Annual Freight Costs
	Shipping Quantity​ (Q)
Supplier	10,000	25,000	50,000	​Price/Unit (p)	Annual Holding​ Cost/Unit (H)	Lead Time​ (L) (wks)	Annual Administrative Cost
Zelda	​$45,000	​$25,000	​$18,000	​$7.00	​$1.40	8	​?

Management has begun to assess the administrative costs to manage the contract with Zelda. What is the lowest level of administrative costs at which Weekend Projects would be indifferent between using Zelda versus the option you chose in part​ (a)?

Weekend Projects would be indifferent if administrative costs are ​$______​(Enter your response as an​ integer.)

one blank at bottom of question, that is my only question

Answer 1