Practical Management Science
6th Edition
ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
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A hotel purchases 8,000 gallons of a cleaning product. Each gallon costs $10 and the cost of holding one gallon for a year is estimated to be $3. The ordering cost amounts to $30 per order.
- If the hotel orders in lots of 500 gallons, how many orders does it place each year?
- What are the ordering and holding costs, and total annual cost?
- If the economic ordering quantity is used, how much improvement in cost will result?
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