Eternal City operates several theme parks throughout the western United States and uses 30,000 gallons of machine oil on an annual basis. The parks operate 50 weeks per year and are considering 2 suppliers of oil, Sharps LTD and Winkler LLC. Sharps Price per unit is $4.00 and Winkler is $3.80. Sharps annual holding cost is $0.80 per unit and Winkler is $0.76. Sharps lead time is 4 weeks, Winkler is 6 weeks. Sharps admin costs are $4,000 and Winkler is $5,000 Annual Freight Costs Supplier 5,000 10,000 15,000 Sharps $5,000 $2,600 $2,000 Winkler $5,500 $3,200 $2,900 What are total annual costs given a shipment quantity of 5,000 gallons from Sharps? a. $139,230 b. $261,220 c. $456,000 d. $132,920 e. $139,220

$132,920

Explanation:

Annual demand D = 30,000

Order quantity Q = 5,000

Annual holding cost per unit H = $0.80

Annual holding cost = (Q/2)*H

Annual holding cost = (5,000/2)*$0.80

Annual holding cost = 2,500 * $0.80

Annual holding cost = $2,000

Annual shipping cost = $5,000

Unit cost = $4.00

Annual admin cost = $4,000

Lead time cost = (Lead Time*H*D)/Weeks per year

Lead time cost = 4*$0.80*30,000/ 50

Lead time cost = $1,920

Cost of product = Unit cost * D

Cost of product = $4 * 30,000

Cost of product = $120,000

Total cost = Total order cost + Holding cost + Admins cost + Cost of product + LT cost

Total cost = $5,000 + $2,000 + $4,000 + $120,000 + $1,920

Total cost = $132,920

Thus, the total annual costs given a shipment quantity of 5,000 gallons from Sharps is $132,920

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two years ago, when picking flowers in the mountains back of yosemite valley, i found a book. it was blotted and storm-beaten; all of its outer pages were mealy and crumbly. the paper seemed to dissolve like the snow beneath which it had been buried, however; many of the inner pages were well preserved. and although all were more or less stained and torn, whole chapters were easily readable. this is the condition of the great open book of yosemite glaciers today; its granite pages have been torn and blurred by the same storms that wasted the castaway book.

two years ago, when picking flowers in the mountains back of yosemite valley; i found a book. it was blotted and storm-beaten, all of its outer pages were mealy and crumbly. the paper seemed to dissolve like the snow beneath which it had been buried, however, many of the inner pages were well preserved. and although all were more or less stained and torn; whole chapters were easily readable. this is the condition of the great open book of yosemite glaciers today, its granite pages have been torn and blurred by the same storms that wasted the castaway book.