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What is the economic order quantity of supplier

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A manager of a car wash has received a price list from two suppliers of the liquid soap. She knows the annual usage of soap is 4,250 liters. The car wash is open 360 days a year. The ordering cost is $10 and holding cost rate is 30 percentage of unit cost.

Supplier A Supplier B Quantity Unit Price Quantity Unit Price
1- 499 $6.00 1-399 $6.10
500-999 $5.50 400-799 $5.60
1000 and more. $5.00 800 and more $5.10

a) What is the economic order quantity (EOQ) of each supplier?

b) What are ordering cost, holding cost, and total cost of each supplier according to their EOQ in part a?

c) Compute the number of orders per year and time between orders for each supplier according to their EOQ in part a.

d) Which supplier should be used? Why?

Reference no: EM132712906

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