Question

Problem 9-11 (Algorithmic)

Edwards Manufacturing Company purchases two component parts from three different suppliers. The suppliers have limited capacity, and no one supplier can meet all the company’s needs. In addition, the suppliers charge different prices for the components. Component price data (in price per unit) are as follows:

	Supplier
Component	1	2	3
1	$11	$12	$15
2	$11	$10	$11

Each supplier has a limited capacity in terms of the total number of components it can supply. However, as long as Edwards provides sufficient advance orders, each supplier can devote its capacity to component 1, component 2, or any combination of the two components, if the total number of units ordered is within its capacity. Supplier capacities are as follows:

Supplier	1	2	3
Capacity	550	975	800

If the Edwards production plan for the next period includes 1025 units of component 1 and 775 units of component 2, what purchases do you recommend? That is, how many units of each component should be ordered from each supplier?

	Supplier
	1	2	3
Component 1
Component 2

What is the total purchase cost for the components?

$ ----------

Answer 1

Supplier 1 Supplier 2 Supplier 3 Component 1 12 15 10 Component 2 Decisions Variables 4 Number of units of each component from each supplier Supplier 2 Supplier 1 Supplier 3 Component 1 Component 2 Objective function Minimize the total purchase cost 11 SUMPRODUCT(B7:D8,B2:D3) Constraints 12 13SUM(B7:D7 1025 14 -SUM(B8:D8) 775 15 B7+B8 550 16 -C7+C8 975 17 D7+D8 800 18

Supplier 1 Supplier 2 Supplier 3 2 Component1 11 12 15 10 3 Component 211 4 Decisions Variables 5 Number of units of each component from each supplier Supplier 1 Supplier 2 Supplier 3 7 Component 1 8 Component 2 Objective function Minimize the total purchase cost Constraints 12 13 0 1025 0 775 550 0 16 0 975 17 800

on Solver Parameters Ar SAS11 Set Objective ti O Max To: Value Of: By Changing aiable Cells: Su SBS7:SDS8 Subject to the Constraints: SAS13:SAS14 SCS13:SCS14 SAS15:SAS17SCS15:SCS17 SBS7:SDS80 Add t fr Su Change Delete Reset All Load/Save Make Unconstrained Variables Non-Negative Select a SolvingSimplex LP Method: Options Solving Method Select the GRG Nonlinear engine for Solver Problems that are smooth nonlinear. Select the LP Simplex engine for linear Solver Problems, and select the Evolutionary engine for Solver problems that are non-smooth. Help Solve Close

4 Decisions Variables Number of units of each component from each supplier 5 Supplier 1 Supplier 2 Supplier 3 7 Component 1 550 475 C) 8 Component 20 500 275 9 Objective function Minimize the total purchase cost 10 19775

Total purchase cost for the components = $19775