Q3. A purchasing agent for a particular type of silicon wafer used in the production of semiconductors must decide among three sources. Source A will sell the silicon wafers for $2.50 per wafer, independently of the number of wafers ordered. Source B will sell the wafers for $2.40 each but will not consider an order for fewer than 3,000 wafers, and Source C will sell the wafers for $2.30 each but will not accept an order for fewer than 4,000 wafers. Assume an order setup cost of $100 and an annual requirement of 20,000 wafers. Assume a 20 percent annual interest rate for holding cost calculations. Which source should be used, and what is the size of the standing order?
Q3. A purchasing agent for a particular type of silicon wafer used in the production of semiconductors must decide among three sources. Source A will sell the silicon wafers for $2.50 per wafer, independently of the number of wafers ordered. Source B will sell the wafers for $2.40 each but will not consider an order for fewer than 3,000 wafers, and Source C will sell the wafers for $2.30 each but will not accept an order for fewer than 4,000 wafers. Assume an order setup cost of $100 and an annual requirement of 20,000 wafers. Assume a 20 percent annual interest rate for holding cost calculations. Which source should be used, and what is the size of the standing order?
Q3. A purchasing agent for a particular type of silicon wafer used in the production of semiconductors must decide among three sources. Source A will sell the silicon wafers for $2.50 per wafer, independently of the number of wafers ordered. Source B will sell the wafers for $2.40 each but will not consider an order for fewer than 3,000 wafers, and Source C will sell the wafers for $2.30 each but will not accept an order for fewer than 4,000 wafers. Assume an order setup cost of $100 and an annual requirement of 20,000 wafers. Assume a 20 percent annual interest rate for holding cost calculations. Which source should be used, and what is the size of the standing order?