Question

Edwards Manufacturing Company purchases two component parts from three different suppliers. The suppliers have limited capacity, and no one supplier can meet all the company’s needs. In addition, the suppliers charge different prices for the components. Component price data (in price per unit) are as follows:

	Supplier
Component	1	2	3
1	$12	$14	$10
2	$14	$12	$10

Each supplier has a limited capacity in terms of the total number of components it can supply. However, as long as Edwards provides sufficient advance orders, each supplier can devote its capacity to component 1, component 2, or any combination of the two components, if the total number of units ordered is within its capacity. Supplier capacities are as follows:

Supplier	1	2	3
Capacity	550	1025	850

If the Edwards production plan for the next period includes 1025 units of component 1 and 825 units of component 2, what purchases do you recommend? That is, how many units of each component should be ordered from each supplier? Round your answers to the nearest whole number. If your answer is zero, enter "0".

	Supplier
	1	2	3
Component 1
Component 2

What is the total purchase cost for the components? Round your answer to the nearest dollar.

Answer 1

Answer :

Given that :

Component price data is as follows ;

Component / Supplier	1	2	3
1	12	14	10
2	14	12	10

Supplier 1 supplies component 1 at rate = $ 12

Purchasing unit of component of 1st supplier = 550

Therefore, the unit of component 1 of 10 each = $ 550 * 12

= 6600

So,remaining 500(1050 - 550)unit of component 1 will be purchased by supplier 3.

Because,it supplies for the next level of cost of each $10

Therefore,500 units of component 1 at unis 10 = $10 * 500

= $ 5000

Hence the total cost of purchasing component 1 = $ 6600 + $ 5000

= $ 11,600

Presently to purchase component 2 we can endure by outstanding limit of supplier 3 and other staying by supplier 3 and other staying by supplier 2,

i.e $ 12 each to make this simple we will just make the buy from supplier 2.

Now 825 * 12 = 9900

Therefore the total cost for the component = $ 11,600 + $ 9,900

= $ 21,500

Table :

Component	Supplier
	1	2	3
1	6600		5000
2		9900