Answer:
a. The full range of the order sizes where each supplier is optimal is:
Supplier A, from 1 to 280 units
Supplier B, from 1,000 units upwards
Supplier C, from 280 to 1,000
b. The company decided to buy 300 units of component H from supplier A. How much money could the company have saved if it purchased the 300 units from supplier C instead of supplier A?
Savings from purchasing from C instead of from A = $450
c. To purchase 600 units during B's 10% off special:
Supplier C should be chosen. It enjoys the minimal cost-advantage.
Step-by-step explanation:
a) Data and Calculations:
b) Cost of purchasing 300 units from A = $1,650 ($5.50 * 300)
Cost of purchasing 300 units from C = $1,200 ($4.00 * 300)
Savings from purchasing from C = $450 ($1,650 - $1,200)
c) 10% off special by B. This reduces its price from $2 to $1.80 plus the $1,500 per order
Cost of purchasing 600 units from B during the special discount offer =
$1,500 + ($1.80 * 600) = $2,580
Cost of purchasing 600 units from A during B's special discount offer =
$5.50 * 600 = $3,300
Cost of purchasing 600 units from C during B's special discount offer =
$4 * 600 = $2,400
Range of order sizes:
Supplier A, from 1 to 280 units: Above 280 units, Supplier C will be preferred in terms of total cost.
Supplier B, from 1,000 units upwards: This will reduce the unit cost to $3.50 or below.
Supplier C, from 280 to 1,000: Below 280 units, Supplier A performs better than C.