A company can purchase component Hfrom 3 potential suppliers. Supplier A charges a fee of $5.50 per component. Supplier B charges $1500 per order plus $2.00 per component ordered. Supplier C charges $4.00 per component, andrequires the buyer to pay for at least 280components (even if the order size is less than 280). Required:
a. What is the full range of order sizes where each supplier is optimal?
b. The company decided to buy 300 units of component H from supplier A. How much money could the company have saved if it purchased the 300 units from supplier C instead of supplier A?
c. Next week supplier B will be running a 10% off special. If the company needs to purchase 600 units of component H during the special, which supplier should be chosen?

a. The full range of the order sizes where each supplier is optimal is:

Supplier A, from 1 to 280 units

Supplier B, from 1,000 units upwards

Supplier C, from 280 to 1,000

b. The company decided to buy 300 units of component H from supplier A. How much money could the company have saved if it purchased the 300 units from supplier C instead of supplier A?

Savings from purchasing from C instead of from A = $450

c. To purchase 600 units during B's 10% off special:

Supplier C should be chosen.  It enjoys the minimal cost-advantage.

Explanation:

a) Data and Calculations:

b) Cost of purchasing 300 units from A = $1,650 ($5.50 * 300)

Cost of purchasing 300 units from C = $1,200 ($4.00 * 300)

Savings from purchasing from C = $450 ($1,650 - $1,200)

c) 10% off special by B.  This reduces its price from $2 to $1.80 plus the $1,500 per order

Cost of purchasing 600 units from B during the special discount offer =

$1,500 + ($1.80 * 600) = $2,580

Cost of purchasing 600 units from A during B's special discount offer =

$5.50 * 600  = $3,300

Cost of purchasing 600 units from C during B's special discount offer =

$4 * 600 = $2,400

Range of order sizes:

Supplier A, from 1 to 280 units: Above 280 units, Supplier C will be preferred in terms of total cost.

Supplier B, from 1,000 units upwards: This will reduce the unit cost to $3.50 or below.

Supplier C, from 280 to 1,000: Below 280 units, Supplier A performs better than C.

d, conspicuous consumption is when you try to increase your wealth or social status (and in the case he's trying to create the perception of wealth considering he can't really afford it)

answer; it can vividly demonstrate product attributes and persuasively explain their corresponding consumer benefits;