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The annual demand of a manufacturing component used in company Kuantan Inc. is 43,000 units. The cost of the component is $65 and holding costs (which includes storage, insurance, and cost of capital) are 36.5% of the unit cost. Each time an order is placed the company expects to incur costs, such as administrative and receiving, of $290. The supplier lead time is 6 days and the company operates with even production 365 days a year. Calculate the total annual cost (TAC) for this component based on the EOQ calculation (TAC = total purchase, holding and order costs). Before calculating total order cost, round the number of orders up to the closest whole number. Choose the closest answer from the list below. 2,819,339 2,658,031 2,514,950 3,036,533.
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Develop a report for Figi Fabricating that will address the question of whether the company should continue to purchase the part from the supplier or begin to produce the part itself.
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