Judith Thompson is the manager of the student center cafeteria.She is introducing pizza as a menu item.The pizza is ordered frozen from a local pizza establishment and baked at the cafeteria.Judith anticipates a weekly demand of 10 pizzas.The cafeteria is open 45 weeks a year,5 days a week.The ordering cost is $15 and the holding cost is $0.40 per pizza per year.What is the optimal number of pizzas Judith should order?
A)184 pizzas
B)9 pizzas
C)5 pizzas
D)28 pizzas
E)None of the above

Question

Quizplus · Accepted Answer

The optimal number of pizzas Judith should order is 184 pizzas. This is because the ordering cost is $15 and the holding cost is $0.40 per pizza per year. The total cost of ordering and holding pizzas is therefore $15 + (0.40 * 184) = $88.60. The weekly demand is 10 pizzas, so the total demand for the year is 10 * 45 = 450 pizzas. The optimal number of pizzas to order is therefore 184 pizzas, which is the quantity that minimizes the total cost of ordering and holding pizzas.

Judith Thompson Is the Manager of the Student Center Cafeteria