### Calculate the total cost for supplier

Assignment Help Operation Management
##### Reference no: EM13104717

 Your company assembles five different models of a motor scooter that is sold in specialty stores in the United States. The company uses the same engine for all five models. You have been given the assignment of choosing a supplier for these engines for the coming year. Due to the size of your warehouse and other administrative restrictions, you must order the engines in lot sizes of 1,320 each. Because of the unique characteristics of the engine, special tooling is needed during the manufacturing process for which you agree to reimburse the supplier. Your assistant has obtained quotes from two reliable engine suppliers and you need to decide which to use. The following data have been collected:

 Requirements (annual forecast) 15,840 units Weight per engine 25 pounds Order processing cost \$130 per order Inventory carry cost 20 percent of the average value of inventory per year
 Note: Assume that half of lot size is in inventory on average (1,320/2 = 660 units). Two qualified suppliers have submitted the following quotations:
 ORDER QUANTITY SUPPLIER 1UNIT PRICE SUPPLIER 2UNIT PRICE 1 to 1,499 units/order \$ 535 \$ 534 1,500 to 2,999 units/order 533 534 3,000 + units/order 531 528 Tooling costs \$ 31,760 \$ 29,000 Distance 130 miles 100 miles
 Note: Per ton-mile = 2,000 lbs. per mile.

 a-1. Calculate the total cost for each supplier. (Round your answers to the nearest whole number.)
 Supplier 1 Supplier 2 Total cost \$ \$
a-2.

Which supplier would you select?

 Supplier 2 Supplier 1

 b-1. If you could move the lot size up to ship in truckload quantities, calculate the total cost for each supplier. (Do not round intermediate calculations. Round "Required lot size for truckload" and final answers to the nearest whole number.)

 Supplier 1 Supplier 2 Total cost \$ \$

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