Question

1. Hank Leighton is the Vice President of Purchasing for the consumer electronics division of the Major Electric Corporation (MEC). The company recently introduced a new type of video camcorder that has taken the market by storm. Although Hank is pleased with the strong demand for this product in the market place, it has been a challenge to keep up with MEC'S distributors' orders of this camcorder. His current challenge is how to meet requests from MEC's major distributors in Pittsburgh, Denver, Baltimore, and Houston who have placed orders of 10,000, 20,000, 30,000, and 25,000 units, respectively, for delivery in two months (there is a one-month manufacturing and one-month shipping lead time for this product). MEC has contracts with companies in Hong Kong, Korea, and Singapore who manufacture camcorders for the company under the MEC label. These contracts require MEC to order a specified minimum number of units each month at a guaranteed per unit cost. The contracts also specify the maximum number of units that may be ordered at this price. The following table summarizes these contracts: Supplier Hong Kong Korea Singapore Monthly Purchasing Contract Provisions Minimum Maximum Unit Cost Required Allowed $375 20,000 30,000 $390 25,000 40,000 $365 15,000 30,000 MEC also has a standing contract with a shipping company to transport product from each of these suppliers to ports in San Francisco and San Diego. The cost of shipping from each supplier to each port is given in the following table along with the minimum required and maximum allowable number of shipping containers each month: Monthly Shipping Contract Provisions San Francisco Shipping San Diego Shipping Requirements Requirements Cost per Minimum Maximum Cost per Minimum Maximum Container Containers Containers Container Containers Containers $2,000 5 $2,300 20 $1,800 10 30 $2,100 10 30 $2,400 $2.200 5 Supplier Hong Kong Korea Singapore 25 15 Under the terms of this contract, MEC guarantees it will send at least 20 but no more than 65 shipping containers to San Francisco each month, and at least 30 but no more than 70 shipping containers to San Diego each month. Each shipping container can hold 1,000 video cameras. The containers will ultimately be trucked from the seaports on to the distributors. Again, MEC has a standing contract with a trucking company to provide trucking services each month. The cost of trucking a shipping container from each port to each distributor is summarized in the following table.

i think i have the correct answers for (a-d) but am struggling with e. thank you!

Answer 1

e. As per Question above , Hong Kong can supply minimum 20000 Units and maximum 30000 Units , so as Hong Kong will be able to supply only 25000 Cam Corders and demand in Houston increases to 35000 , then 35000 Units Korea Supplier will be able to fulfill as it is within Korea's maximum Units which It can supply .

Optimal Cost :- 35000* $390 = $13650000 .