Practical Management Science
6th Edition
ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
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MamaMia's Pizza purchases its pizza delivery boxes from a printer. MamaMia's delivers an average of 450 pizzas weekly. Boxes cost 75 cents each, and each order costs $3 to process. Because of limited storage space, the manager wants to charge inventory holding at 18 percent of box unit cost. The lead time to obtain boxes from the printer is seven days, and the restaurant is open 360 days per year.
A. The economic order quantity (EOQ) for boxes is approximately:
B. In the MamaMia's Pizza example above, the total annual cost (TAC) associated with the EOQ-based policy is approximately:
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