Chris Sandvig Irrigation, Inc., has summarized the price list from four potential suppliers of an underground control valve. See the accompanying table. Annual usage is 2,400 valves; order cost is $10 per order; and annual inventory holding costs are $3.33 per unit. Which vendor should be selected and what order quantity is best if Sandvig Irrigation wants to minimize total cost?

MARKETING 2018
19th Edition
ISBN:9780357033753
Author:Pride
Publisher:Pride
Chapter11: Product Concepts, Branding, And Packaging
Section11.1: Gaga: Not Just A Lady
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Chris Sandvig Irrigation, Inc., has summarized
the price list from four potential suppliers of an underground
control valve. See the accompanying table. Annual usage is
2,400 valves; order cost is $10 per order; and annual inventory holding costs are $3.33 per unit.
Which vendor should be selected and what order quantity
is best if Sandvig Irrigation wants to minimize total cost?

VENDOR A
VENDOR B
QUANTITY
PRICE
QUANTITY
PRICE
1-49
$35.00
1-74
$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
300-499
31.15
500+
30.50
500+
30.75
VENDOR C
VENDOR D
QUANTITY
PRICE
QUANTITY
PRICE
1-99
$34.50
1-199
$34.25
100-199
33.75
200-399
33.00
200-399
32.50
400+
31.00
400+
31.10
Transcribed Image Text:VENDOR A VENDOR B QUANTITY PRICE QUANTITY PRICE 1-49 $35.00 1-74 $34.75 50-74 34.75 75-149 34.00 75-149 33.55 150-299 32.80 150-299 32.35 300-499 31.60 300-499 31.15 500+ 30.50 500+ 30.75 VENDOR C VENDOR D QUANTITY PRICE QUANTITY PRICE 1-99 $34.50 1-199 $34.25 100-199 33.75 200-399 33.00 200-399 32.50 400+ 31.00 400+ 31.10
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