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 $10 $14 $10 2 $16 $12 $10 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 600 1000 800

if the edwards production plan for the next period includes 1000 units of component 1 and 800 units of component 2, how many units of each component should be ordered from each supplier? what is the total purchase cost for the components?

Onsider the following subscription behavior information from genie, a web site that provides tools for constructing a family tree (ancestor search). subscriptions cost $9.99 per month, but you are charged for the entire year at the time of purchase. there is a one-year minimum term when you sign up for the service. once purchased, subscriptions are set to renew automatically unless the subscriber cancels them. when a membership renews, it renews for a one-year term and again you are charged for the entire year. there are no variable costs associated with providing this service to an individual customer, but genie does engage in customer relationship activities that they believe will increase customer retention. these customer relationship activities cost genie about $10 per year per customer. based on a sample of 1000 customers that joined genie five years ago, near the time when the company was founded, they were able to determine how many of those customers remained subscribers in the second year, third year etc. based on this information, genie calculated the average annual retention rate to be 20%. genie uses an annual discount rate of 8%. a. last year, genie spent $10,000 placing advertisements on google. genie management believes that these advertisements were responsible for about 300 new subscribers. would you recommend to genie management that they purchase more google ads? b. suppose a newly-introduced loyalty program increases the number of customers that remained to 30%. does this new data change your answer to 9.a? c. do you have any hesitations or concerns about making recommendations to management based on your above estimate of customer lifetime value?