My Kitchen Delights (MKD) is considering two new suppliers for the jars used in the production

My Kitchen Delights (MKD) is considering two new suppliers for the jars used in the production process. The quality at both suppliers is equal. Assume that the annual holding cost is 30% of the unit price. Monthly demand averages 20,000 jars. Ordering cost with these two suppliers is $30 per order. The price lists for the suppliers are as follows:

Supplier A		Supplier B
Quantity	Unit Price	Quantity	Unit Price
1 - 2499	$ 3.00	1 - 1999	$ 3.50
2500 - 3499	$ 2.90	2000 - 2999	$ 3.15
3500 - 4999	$ 2.80	3000 - 3999	$ 2.85
5000 or more	$ 2.70	4000 - 4999	$ 2.75
		5000 or more	$ 2.60

a)Determine the optimal order quantity when using Supplier A
b)Determine the optimal order quantity when using Supplier B
c)Given MKD’s lack of space, which supplier do you recommend by used? Justify your answer

11 years ago

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My Kitchen Delights (MKD) is considering two new suppliers for the jars used in the production

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