Mama Leone's Frozen Pizzas uses 50,000 units of cheese per year. Each unit costs $2.50. The ordering cost for the cheese is $250 per order, and its carrying cost is $0.50 per unit per year. Calculate the firm's economic order quantity (EOQ) for the cheese. Mama Leone's operates 250 days per year and maintains a minimum inventory level of 2 days' worth of cheese as a safety stock. If the lead time to receive orders of cheese is 3 days, calculate the reorder point.
Mama Leone's Frozen Pizzas uses 50,000 units of cheese per year. Each unit costs $2.50. The ordering cost for the cheese is $250 per order, and its carrying cost is $0.50 per unit per year. Calculate the firm's economic order quantity (EOQ) for the cheese. Mama Leone's operates 250 days per year and maintains a minimum inventory level of 2 days' worth of cheese as a safety stock. If the lead time to receive orders of cheese is 3 days, calculate the reorder point.
Chapter1: Making Economics Decisions
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Transcribed Image Text:Mama Leone's Frozen Pizzas uses 50,000 units of
cheese per year. Each unit costs $2.50. The ordering
cost for the cheese is $250 per order, and its carrying
cost is $0.50 per unit per year. Calculate the firm's
economic order quantity (EOQ) for the cheese. Mama
Leone's operates 250 days per year and maintains a
minimum inventory level of 2 days' worth of cheese as
a safety stock. If the lead time to receive orders of
cheese is 3 days, calculate the reorder point.
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