Emery Pharmaceutical uses an unstable chemical compound that must be kept in an environment where both temperature and humidity can be controlled. Emery uses 200 pounds per month of the chemical, estimates the holding cost to be £3.33 (because of spoilage), and estimates order costs to be £10 per order.   What quantity should be ordered, and which supplier should be used?   Discuss factor(s) should be considered besides total cost.

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
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Emery Pharmaceutical uses an unstable chemical compound that must be kept in an environment where both temperature and humidity can be controlled.

Emery uses 200 pounds per month of the chemical, estimates the holding cost to be £3.33 (because of spoilage), and estimates order costs to be £10 per order.

 

  1. What quantity should be ordered, and which supplier should be used?

 

  1. Discuss factor(s) should be considered besides total cost.
Vendor 1
Vendor 2
Price/LB (£)
Price/LB (£)
Quantity
1-49
Quantity
1-74
35.00
34.75
50-74
34.75
75-149
34.00
75-149
33.55
150-299
32.80
150-299
32.35
300-499
31.60
35.50
300-499
31.15
500+
500+
30.75
Vendor 3
Vendor 4
Quantity
1-99
Price/LB (£)
34.50
Quantity
1-199
Price/LB (£)
34.25
100-199
33.75
200-399
33.00
200-399
32.50
400+
31.00
400+
31.10
Transcribed Image Text:Vendor 1 Vendor 2 Price/LB (£) Price/LB (£) Quantity 1-49 Quantity 1-74 35.00 34.75 50-74 34.75 75-149 34.00 75-149 33.55 150-299 32.80 150-299 32.35 300-499 31.60 35.50 300-499 31.15 500+ 500+ 30.75 Vendor 3 Vendor 4 Quantity 1-99 Price/LB (£) 34.50 Quantity 1-199 Price/LB (£) 34.25 100-199 33.75 200-399 33.00 200-399 32.50 400+ 31.00 400+ 31.10
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