3. A restaurant serves an average of 623 desert (leche flan) servings every week. The manager places an order of 1,000 servings every time she calls the supplier. Record shows that ordering cost per order is PhP30, and the holding cost per serving per year is PhP5.00. a. What is the current annual inventory costs incurred by the restaurant. b. If EOQ is used, what will be the inventory cost incurred by the restaurant each year? c. What order quantity would you recommend for the restaurant? Why?

3. A restaurant serves an average of 623 desert (leche flan) servings every week. The manager places an order of 1,000 servings every time she calls the supplier. Record shows that ordering cost per order is PhP30, and the holding cost per serving per year is PhP5.00. a. What is the current annual inventory costs incurred by the restaurant. b. If EOQ is used, what will be the inventory cost incurred by the restaurant each year? c. What order quantity would you recommend for the restaurant? Why?

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Chapter16: Lean Supply Chain Management

Section: Chapter Questions

Problem 10DQ: The chapter presented various approaches for the control of inventory investment. Discuss three...

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A restaurant serves an average of 623 desert (leche flan) servings every week. The manager places an order of 1,000 servings every time she calls the supplier. Record shows that ordering cost per order is PhP30, and the holding cost per serving per year is PhP5.00. a. What is the current annual inventory costs incurred by the restaurant.b. If EOQ is used, what will be the inventory cost incurred by the restaurant each year?c. What order quantity would you recommend for the restaurant? Why?
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1. The monthly demand for a part is 1,500 units. The order cost is $285 per order, the holding cost is $56 per unit per year and the part cost is $850 per unit. The firm operates twelve months per year. Compute the (a) EOQ, (b) annual holding cost, (c) annual order cost, and (d) annual total inventory cost. 2. The weekly requirement of a part is 950 units. The order cost is $85 per order, the holding cost is $5 per unit per year and the part cost is $250 per unit. The firm operates fifty-two weeks per year. Compute the (a) EOQ, (b) annual holding cost, (c) annual order cost, and (d) annual total inventory cost. 3. Given the following information, compute the economic order quantity, annual holding cost, annual order cost and annual total inventory cost.Annual requirements (R) = 50,000 unitsOrder cost (S) = $150 per orderHolding rate (k) = 15%Unit cost (C) = $100 per unit