Ann Chovies,owner of the Perfect Pasta Pizza Parlour,uses 20 pounds of pepperoni each day in preparing pizzas.Order costs for pepperoni are $10.00 per order,and holding costs are 4 cents per pound per day.Lead time for each order is 3 days,and the pepperoni itself costs $3.00 per pound. If she were to order 80 pounds of pepperoni at a time,what would be the total daily costs,including the cost of the pepperoni?

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Quizplus · Accepted Answer

The total daily cost includes the cost of the pepperoni, ordering costs, and holding costs. The daily cost of pepperoni is 20 pounds * $3.00 = $60.00. Ordering cost per day is ($10.00 per order / 80 pounds) * 20 pounds = $2.50. Holding cost per day is (80 pounds / 2) * $0.04 = $1.60. Total daily cost = $60.00 + $2.50 + $1.60 = $64.10.

Ann Chovies,owner of the Perfect Pasta Pizza Parlour,uses 20 Pounds