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?
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Vendor A
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Vendor B
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|
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
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Vendor D
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|
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
|
|