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Business, 19.02.2021 02:20 echavarrianoah

Green Thumb, a manufacturer of lawn mowers and snowblowers has historically purchased a thousand bearings per week from a local supplier who charges $1.00 per bearing. The purchasing manager has identified another potential source willing to supply the bearings at $0.97 per bearing. Before making his decision, the purchasing manager evaluates the performance of the two suppliers. The local supplier has an average lead time of two weeks and has agreed to deliver the bearings in batches of 2,000. Based on past on-time performance, the purchasing manager estimates that the lead time has a standard deviation of one week. The new source has an average lead time of six weeks with a standard deviation of four weeks. The new source requires a minimum batch size of 8,000 bearings. Which supplier should the purchasing manager go with (ignore ordering cost and focus on material cost and holding cost when making your decision)

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