Illustrate what is optimal order quantity

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Reference no: EM1374697

Q. catering manager of LaVista Hotel, Lisa Ferguson, is disturbed by amount of silverware she is losing every week. Last Friday night, when her crew tried to set up for a banquet for 500 people, y did not have enough knives. She decides she needs to order some more silverware, but needs to take pros of any quantity discounts her vendor will offer. For a small order (2,000 or fewer pieces), her vendor quotes a price of $1.80/piece. If she orders 2,001-5,000 pieces, price drops to $1.60/piece. 5,001-10,000 pieces bring price to $1.40/piece and 10,001 and above reduce price to $1.25. Lisa's order costs are $200 per order, her annual holding costs are 5% and annual demand is 45,000 pieces.

Illustrate what is optimal order quantity? Illustrate what is annual holding cost? Illustrate what is annual ordering (setup) cost? Illustrate what are annual costs of silverware itself with an optimal order quantity? Illustrate what is total annual cost, including ordering, holding and purchasing silverware

Reference no: EM1374697

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