Emery Pharmaceutical uses an unstable chemical compoundthat must be
kept in an environment where both temperature andhumidity 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 coststo be £10 per order. The cost
schedules of two suppliers are as follows:
Vendor 1 Vendor 2 Quantity Price/LB (£) QuantityPrice/LB (£) 1-49 35.00 1-74 34.75 50-74 34.75 75-149 34.00 75-14933.55 150-299 32.80 150-299 32.35 300-499 31.60 300-499 31.15 500+30.50
500+ 30.75
Vendor 3 Vendor 4 Quantity Price/LB (£) QuantityPrice/LB (£) 1-99 34.50 1-199 34.25 100-199 33.75 200-399 33.00200-399 32.50 400+ 31.00
400+ 31.10
a) What quantity should be ordered, and which suppliershould be used?
b) Discuss factor(s) should be considered besides totalcost.
Please with explanations
