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The Steele Bike Company assembles bicycles for a major retail toy outlet. The main purchase is bicycle frames for making these bicycles. Dan Steele,...

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What are the annual material savings available when comparing the two suppliers?

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The Steele Bike Company assembles bicycles for a major retail toy outlet. The main purchase is bicycle
frames fer making these bicycles. Dan Steele, the owner, wants to locate a low-cost supplier for the
frames used in this assembly operation. The supplier will be selected based on total annual cost to supply
Steele's needs. Annual requirements are for 100,000 frames, and the company operates 200 days a year.
Two suppliers, Acme and State, have quoted the same price for the frames, but quantities, lead times and
shipping costs are considerably different. The following data are available for the two suppliers. SHIPPING INVENTD
QUANTITY ANNUAL PRICE}r HOLD LEAD PER SHIPPING FRAME COSTS TIME ADMIN. UPPLIER SHIPMENT COSTS [p] [H] {DAYS} COSTS
CME 27,500 $35,000 $39 $31.30 T $20,000
TATE 2,500 $60,000 $39 $130 3 $45,000 fiSl

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