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Mama Mia’s Pizza purchases its pizza delivery boxes from a printing supplier. Mama Mia’s delivers on-average 225 pizzas each month (assume deterministic demand). Boxes cost 43 cents each, and each order costs $12.50 to process. Because of limited storage space, the manager wants to charge inventory holding at 25 percent of the cost. The lead time is seven days, and the restaurant is open 360 days per year, assuming 30 days per month. Determine the economic order quantity, reorder point assuming no safety stock, number of orders per year, and total annual cost. Plot the cost curves and highlight the EOQ.

Mama Mia’s Pizza purchases its pizza delivery boxes from a printing supplier. Mama Mia’s delivers on-average 225 pizzas each month (assume deterministic demand). Boxes cost 43 cents each, and each order costs $12.50 to process. Because of limited storage space, the manager wants to charge inventory holding at 25 percent of the cost. The lead time is seven days, and the restaurant is open 360 days per year, assuming 30 days per month. Determine the economic order quantity, reorder point assuming no safety stock, number of orders per year, and total annual cost. Plot the cost curves and highlight the EOQ.

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Mama Mia’s Pizza purchases its pizza delivery boxes from a printing supplier. Mama Mia’s

delivers on-average 225 pizzas each month (assume deterministic demand). Boxes cost 43

cents each, and each order costs $12.50 to process. Because of limited storage space, the

manager wants to charge inventory holding at 25 percent of the cost. The lead time is seven

days, and the restaurant is open 360 days per year, assuming 30 days per month. Determine

the economic order quantity, reorder point assuming no safety stock, number of orders per

year, and total annual cost. Plot the cost curves and highlight the EOQ.

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