The Burdell Wheel and Tire Company assembles tires to wheel rims
for use on cars during manufacture of vehicles by the automotive
industry. Burdell wants to locate a low-cost supplier for the tires
he uses in his assembly operation. The supplier will be selected
based on total annual cost to supply Burdell’s needs. Burdell’s
annual requirements are for 25,000 tires, and the company operates
250 days a year. The following data are available for two suppliers
being considered.

Supplier

Shipping Quantity Annual Shipping Costs Price /unit Annual
Holding Cost/unit Lead Time (days) Annual Administrative Cost

Lexington Tire 2,000 $18,000 $41 $8.20 7 $14,000

Irmo Auto 1,500 $22,000 $40 $8.00 5 $18,000

Using the Total Cost Analysis for Supplier Selection, which
supplier should Burdell choose? Provide details to justify your
answer.