MamaMia’s Pizza purchases its pizza delivery boxes from a printing supplier. MamaMia’s delivers on-average 200 pizzas each month (assume deterministic demand). Boxes cost 20 cents each, and each order costs $10 to process. Because of limited storage space, the manager wants to charge inventory holding at 30 percent of the cost. The lead time is 7 days, and the restaurant is open 360 days per year, assuming 30 days per month.
Question 1: what is the reorder point for Mamamia's Pizza? Round your answer to the nearest whole number.
What is the unit holding cost per case per year?
What is the optimal order quantity?
If applying the optimal order quantity you find, how many times does the firm need to order every year? (Number of orders per year)
What is the average inventory level if applying the optimal order quantity you find?
What are the total annual cost (only include holding cost and ordering cost) if applying your optimal order policy?