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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?

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?

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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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?
Transcribed Image Text: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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