Calulator Problem 4-11 (Algorithmic) Edwards Manufacturing Company purchases two

Question

Calulator Problem 4-11 (Algorithmic) 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 $10 $14 $13 $12 $12 $12 Each supplier has a limited capacity in terms of the total number of components it can supply. Howewer, as long as Edwards provides sufficient advance orders, each supplier ordered is within its capacity. Supplier capacities can devote its capacity to component 1, component 2, or any combination of the two comoonents, if the total number of units are as follows: Supplier Capacity 550 1025 800 If the Edwards production plan for the next period includes 1050 units of component 1 and B00 units of component 2, what purchaseu do you units of each component should be ordered from each supplier 7 Round your answers to the nearest whole number Supplier Component1 Component 2 s the total purchase cost for the components? Round your answer to the nearest dollar Next Check Hy Work 3 more Check My Work uses remainng for Grading

Explanation / Answer

Component 1 requirement = 1050 units

Component 2 requirement = 800 units

Supplier 1 has the capacity to supply 550 units.

Hence 550 units of component 1 would be bought from supplier 1 at the price of $10 per unit.

Remaining 500 units of component 1 would be bought from supplier 3 at the price of $13 per unit. Component 1 would not be bought from supplier 2 since his price is highest among three suppliers for component 1.

Since, price of component 2 is same for all the suppliers. Hence, it does not matter whether to buy component 2 from suppler 1 or supplier 2 or supplier 3. But supplier 1 has the capacity to supply 550 units and 550 units of component 1 have already been bought from supplier 1, hence component 2 cannot be bought from the supplier 1.

800 units of component 2 can be bought in either of the following two ways:

(i) 800 units from supplier 2 or

(ii) 300 units from supplier 3 and 500 units from supplier 2

But the above two alternatives have same impact on cost.

Total purchase cost of components = (550 x 10) + (800 x 12) + (500 x 13)

= 5,500 + 9,600 + 6,500

= $21,600

Kindly give a positive rating if you are satisfied with the answer. Feel free to ask if you have any doubts. Thanks.

Supplier 1 2 3 Component 1 550 0 500 Component 2 0 800 0

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.