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Harley Davidson purchases components from three suppliers. Components purchased from Supplier A are priced at $...

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General Management

Harley Davidson purchases components from three suppliers.Components purchased from Supplier A are priced at $ 5 each andused at the rate of 200000 units per year. Components purchasedfrom Supplier B are priced at $ 4 each and are used at the rate of50,000 units per year. Components purchased from Supplier C arepriced at $ 5 each and used at the rate of 22,800 units per year.Currently Harley purchases a separate truckload from each supplier.As part of its JIT drive, Harley has decided to aggregate purchasesfrom the three suppliers. The trucking company charges a fixed costof $ 400 for the truck with an additional charge of $100 for eachstop. Thus, if Harley asks for a pickup from only one supplier, thetrucking company charges $ 500; from two suppliers it charges $600; and from three suppliers it charges $ 700. Harley incurs aholding cost of 20% (of the price) for each component.

1. What is the Minimal annual inventory cost of the newaggregate replenishment stratedy?

2. What is the minimal annual inventory cost of the Harley'scurrent strategy of ordering seperately from each supplier?

3.How much is the saving resulted?

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