The catering manager of la vista 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 or fewer pieces), her vendor quotes a price of $1.80/piece. if she orders 2,001–5,000 pieces, the price drops to $1.60/piece. 5,001–10,000 pieces brings the price to $1.40/piece, and 10,001 and above reduces the price to $1.25. lisa’s order costs are $200 per order, her annual holding costs are 5%, and the monthly demand is 3750 pieces. for the best option: (the best option is the price leve that results in an eoq within the acceptable range).
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?
is writing an answerξ
i would believe that the government plays an important role in a market economy as we saw in our discussion of competitive markets, a free enterprise system is largely self-regulating. therefore, government plays a limited, but important, role, allowing individuals to make most of the economic decisions.