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Question & Answer: The Green Machine Manufacturing Company is also trying to decide which of…..

What is the total cost of ownership for supplier 1 and 2?The Green Machine Manufacturing Company is also trying to decide which of two suppliers to purchase engines from. Green Machine has agreed to cover the tooling cost for the supplier selected. The relevant information is provided below. Carry all calculations out to two decimal places. Order lot size Annual demand Engine weight Order processing cost Inventory carrying rate 2,500 units 120,000 units 10 pounds $100/order 1% per year Supplier 1 Supplier 2 Unit Price 1 to 999 units Unit Price 1000 to 2999 unitsorder Unit Price 3000 +units/ order Tooling Cost Distance Supplier defect rate (% of engine cost) order 15.00 S306.00 $300.00 13,500 110 miles 2% $309.00 $305.00 5,250 125 miles 196 Truckload (TL 2 40,000 lbs.): $1.05 per ton-mile Less-than-truckload (LTL): $1.75 per ton-mile (Note: per ton-mile 2,000 pounds per mile

The Green Machine Manufacturing Company is also trying to decide which of two suppliers to purchase engines from. Green Machine has agreed to cover the tooling cost for the supplier selected. The relevant information is provided below. Carry all calculations out to two decimal places.

Expert Answer

Answer

Consider the following information Order lot size 2500 units Annual demand-120,000 units Engine weight-10 pounds Order processing cost-$100 per order Carrying cost 190 Supplier 2 $320 $309 $305 $5250 125 miles 1% Supplier 1 $315 Quantit Price for 1-999 Price for 1000-2999 $306 Price for 3000+ Tooling cost Distance Defect rat $300 $13500 110 mile:s 2% Truckload-$1.05 per ton-mile Less than truck load- $1.75 per ton-mile The lot size to be ordered is the quantity carried by the truck load. The truck load is 40,000. Calculate the lot size as follows Truck loadd Weight of the engine Lot size- 40,000 10 4,000

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