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
10,001 and above reduces the price to 1.25/piece
Lisa's order costs are ?$205205 per? order, her annual holding costs are 55?%, and the annual demand is 46 comma 20046,200 pieces. For the best option? (the best option is the price level that results in an EOQ within the acceptable? range):
ANSWER THE FOLLOWING
A) What is the optimum ordering quantity?
B) What is the annual holding cost?
C) What is the annual ordering cost?
D) What are the annual cost of the silverware with an optimal order quantity?
E) What is the total annual cost, including ordering, holding, and purchasing the silverware?