Question

Edwards Manufacturing Company purchases two component parts from three different suppliers. The suppliers have limited capacity, and no one supplier can meet all the company’s needs. In addition, the suppliers charge different prices for the components. Component price data (in price per unit) are as follows:

Supplier

Component 1 2 3

1 $12 $13 $10

2 $15 $12 $10

Each supplier has a limited capacity in terms of the total number of components it can supply. However, as long as Edwards provides sufficient advance orders, each supplier can devote its capacity to component 1, component 2, or any combination of the two components, if the total number of units ordered is within its capacity. Supplier capacities are as follows:


Supplier 1 2 3

Capacity 525 975 900

If the Edwards production plan for the next period includes 1025 uni

Answer 1

A)

Supplier

Component 1 2 3

1 125 900

2 525 300

B) Cost Table

1 2 3 Total

Component 1 1625 9000 10625

Component 2 7875 3600 11475

Total cost 7875 5225 9000 22100

Explanation:

Table 1:

Supplier

Component 1 2 3

1 $12 $13 $10

2 $15 $12 $10

Table 2:

Supplier 1 2 3

Capacity 525 975 900

Now we are supposed to find production plan for the next period includes 1025 units of component 1 and 825 units of component 2

So,

Supplier

Component 1 2 3

1 125 900

2 525 300

Cost Table :

1 2 3

Component 1
`13 * 125`
`900 * 10`

Component 2
`15 * 525`
`12 * 300`

Cost Table

1 2 3 Total

Component 1 1625 9000 10625

Component 2 7875 3600 11475

Total cost 7875 5225 9000 22100