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Marketing has determined that for a new product you have designed the demand will be 100 units a year and you can sell it at $50/ unit.
Marketing has determined that for a new product you have designed the demand will be 100 units a year and you can sell it at $50/ unit. You pay a holding cost per unit that is 40% of the dollar value of the unit. You are evaluating three suppliers for the product. Supplier 1 charges a reorder cost of $50 and a unit cost of $40. Supplier 2 charges a reorder cost of $60 and a unit cost of $35. Supplier 3 charges a reorder cost of $40 and a unit cost of $45. Should you sell the product? If so, which supplier should you choose and how much should you order from the supplier per order?
