Can I have the full steps and infromation please? Managing Economies of Scale: Q

Question

Can I have the full steps and infromation please?

Managing Economies of Scale: Q1) Harley purchases from Supplier A are priced at S5 each and used at the rate of 20,000 units per month. Components purchased from supplier B are priced at $4 each and are used at the rate of 2,500 units per month. Components purchased from supplier C are priced at $5 each and used at the rate of 900 units per month. Currently, Harley purchases a separate truckload from each supplier. As part of its JIT drive, Harley has decided to aggregate purchases from the three suppliers. The trucking company charges a fixed cost of $400 for the truck with an additional charge of S100 for each stop. Thus, if Harley asks for a pickup from only one supplier, the percent per year (a) If Harley orders separately from cach supplier. What is the cycle inventory and total annual cost excluding material cost? (30 points)

Explanation / Answer

Ans..
A
If it orders separately from each supplier, then cycle inventory remains the same
Total annual cost changes in the pickup costs. Pickup cost now becomes 400 + 100 for each pickup.Thus for 3 its 3*500 = 1500. For annual = 1500*12 = 18,000
Total annual cost minus mat cost = 18000 + 274800 = $292,800
Difference with previous = 18000 - 8400 = $9600

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