Scenario 11.1 - Bubble and Squeak
The rising popularity of bubble and squeak as a breakfast item on the menu has resulted in a steady demand for peas.Over the course of the past week,457 patrons have ordered the hearty breakfast and each serving contains a half cup of English peas.It costs two cents to hold a half cup of peas in inventory for a year and $3 to place an order (remember they come all the way from England!).It takes two weeks to ship a container from England loaded with peas.
-What is the optimal order quantity?
A)2670 cups
B)17.8 cups
C)1335 cups
D)8.9 cups

Question

Quizplus · Accepted Answer

To calculate the optimal order quantity, we can use the economic order quantity formula:
EOQ = sqrt((2SD)/H)
where
S = annual demand = number of servings * half cup of peas = 457*0.5 = 229 cups
D = cost of placing an order = $3
H = holding cost per unit = $0.02
Plugging in these values, we get:
EOQ = sqrt((2*229*3)/0.02)
EOQ = 1335 cups (rounded to the nearest whole number)
Therefore, the optimal order quantity is 1335 cups.