Instructions:

QUESTION 3 Banda Supermarket sources bottled milk from three different major supplier, namely s1, s2 and 53. Banda manager has observed the annual demand and the ordering cost (common and specific ordering cost) from each supplier. The following table shows such data and other relevant data. s1 s2 s3 Annual demand 3000 3000 3000 Annual interest rate (holding cost – 20% 20% 20% 1%) Unit cost per bottle ($) 7 7 7 Common order cost ($) 200 200 200 Supplier-specific order cost ($) 50 50 50 Supplier Banda is having only one truck to manage the transportation of the bottled milks from the suppliers to the supermarket. The manager is considering the following scenarios, i.e. supply from the three suppliers is: 1. aggregated with unlimited truck capacity 2. aggregated with truck capacity = 1500 bottles of milk. a. For each scenario above, determine (for each supplier): [1 Mark] The optimal order quantity [0.5 Mark] The order frequency per year iii. [0.5 Mark]

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