What is optimum ordering quantity and annual holding cost

Assignment Help Operation Management

Reference no: EM132145822

The catering manager of LaVista Hotel, Lisa Ferguson, is disturbed by the amount of silverware she is losing every week. Last Friday night, when her crew tried to set up for a banquet for 500? people, they did not have enough knives. She decides she needs to order some more silverware, but wants to take advantage of any quantity discounts her vendor will offer.

For a small order (2,000 pieces or less) her vendor quotes a price of $1.80/piece.

If she orders 2,001 to 5,000 pieces, the price drops to 1.60/piece.

5,001 to 10,000 pieces brings the price to 1.40/piece,

and 10,001 and above reduces the price to 1.25/piece.

Lisa's order costs are $200 per order, her annual holding costs are 5%, and the annual demand is 45,000 pieces. For the best option (the best option is the price level that results in an EOQ within the acceptable range):

A) What is the optimum ordering quantity (round your response to the nearest whole number).

B) What is the annual holding cost (round your response to two decimal places).

C) What is the annual ordering cost (round your response to two decimal places).

D) What are the annual costs of the silverware itself with an optimal order quantity (round your response to the nearest whole number).

E) What is the total annual cost, including ordering, holding, and purchasing the silverware? (round your response to two decimal places).

Reference no: EM132145822

Questions Cloud

Breach of the promise of employment : She sued for breach of the promise of employment until 65. Is her claim barred by the statute of frauds? Explain.

The way that job hunters can market their skills : How have the Internet and technology changed the way that job hunters can market their skills? Provide specific examples.

Replacing its fleet of gas-powered cars with electric cars : A city is considering replacing its fleet of gas-powered cars with electric cars.

Customers must be informed of major changes to business : Customers must be informed of major changes to a business. How would you start out this message? What major points do you think should be covered?

What is optimum ordering quantity and annual holding cost : What is the optimum ordering quantity. What is the annual holding cost. What are the annual costs of the silverware itself with an optimal order quantity

Data concerning customer service performance : An analysis of order and shipment data shows that the order fill rate is 93.3% and ABBA collected the following data concerning customer service performance:

Extemporaneous presentations vs. scripted : What are the differences between impromptu or extemporaneous presentations vs. scripted or memorized presentations?

Development of your leadership theory and practice : Discusses potential next steps in the development of your leadership theory and practice.

Make sure that they know tylenol is not to blame : How would you communicate this to the customers and make sure that they know Tylenol is not to blame?

User Account

All Pages