Question

Ann Chovies, owner of the Perfect Pasta Pizza Parlor, uses 20 pounds of pepperoni each day in preparing pizzas. Order costs for pepperoni are $10.00 per order, and carrying costs are 4 cents per pound per day. Lead time for each order is three days, and the pepperoni itself costs $3.00 per pound. What is the economic order quantity for pepperoni?
a. 80 pounds remainingb. 40 pounds remainingc. 60 poundsd. 20 poundse. 100 pounds

Answer 1

Answer:

The economic order quantity for pepperoni for Ann Chovies is 100 pounds.

Explanation:

Please find the below for the detailed explanations and calculations:

We have the formula for Economic Order Quantity ( EOQ) = The square root of ( 2 x S x D / H)

in which: S stands for fixed ordering cost

               D stands for Quantity demand

                H stands for carrying costs

Apply in the questions, we have: S = $10.00; D = 20 pounds per day; H = 4 cents per day or $0.04 per day

=> EOQ = The square root of ( 2 x 10 x 20/0.04) = 100 pounds