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 per piece. If she orders 2,001 to 5,000 ?pieces, the price drops to ?$1.60 per piece.5,001 to 10,000 pieces brings the price to ?$1.40 per piece, and 10,001and above reduces the price to $1.25 per piece.?Lisa's order costs are?$195 per? order, her annual holding costs are 55?%, and the annual demand is 48,400 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?