1. Company X can purchase a certain component from either Supplier A or Supplier B. Supplier A offers an incremental quantity discount, while Supplier B offers an all-unit quantity discount.

To be specific, Supplier A charges $10 per unit for the first 3,000 units in an order, $9 per unit for the next 3,000 units in the order, and $8 per unit for any unit beyond. Supplier B charges $9 per unit for orders of no more than 8,000 units and $8.5 per unit for any bigger orders.

(a) Suppose Company X decides to buy 10,000 units from Supplier A. What is the average unit cost of the order?**Please provide at least one step of calculation and the correct answer for full credit. (4 points)**

(b) If Company X wants to place an order of 20,000 units, which supplier offers a lower total cost. **Please provide at least one step of calculation and the correct answer for full credit. (4 points)**

2. Given the following information, compute the optimal order quantities as required.

Annual Demand |
100,000 units |

Order Cost |
$200 per order |

Inventory Holding |
10% of unit cost |

(a) Suppose the unit cost of the product is $500. What is the Economic Order Quantity of the inventory control system? **(You can either round up or round down.) Please include the formula, at least one step of calculation, and the correct answer for full credit. (6 points)**

(b) What is the annual total cost if the Economic Order Quantity is ordered each time? **Please include the formula, at least one step of calculation, and the correct answer for full credit. (6 points)**

(c) Suppose an all-unit quantity discount is applied to the product. The seller charges $500 per unit for orders of no more than 1000 units and $480 per unit for any bigger orders. What is the optimal order quantity under the all-unit quantity discount? **Please first calculate the EOQs for each discount price, choose the optimal order quantity for each discount price, and determine the order quantity that minimizes the total cost. (14 points)**

**Custom & Original Paper Today.**

Use our Cheap Academic Essay service for guaranteed success!