Ann Chovies, owner of the Perfect Pasta Pizza Parlor, uses 20 pounds of pepperoni each day in preparing pizzas. Ann works 300 days per year so she needs to buy a total of 6,000 pounds of pepperoni. Order costs for pepperoni are $75 per order, and carrying costs are $.10 per pound per year. Ann has a hurdle rate of 10%, and the pepperoni that Ann buys from her supplier costs $3 per pound.
What is the EOQ for pepperoni?
a. 1,000 pounds.
b. 1,500 pounds.
c. 2,000 pounds.
d. 2,500 pounds.

Question

01-05-2021
Business

Answered

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Ann Chovies, owner of the Perfect Pasta Pizza Parlor, uses 20 pounds of pepperoni each day in preparing pizzas. Ann works 300 days per year so she needs to buy a total of 6,000 pounds of pepperoni. Order costs for pepperoni are $75 per order, and carrying costs are $.10 per pound per year. Ann has a hurdle rate of 10%, and the pepperoni that Ann buys from her supplier costs $3 per pound.
What is the EOQ for pepperoni?
a. 1,000 pounds.
b. 1,500 pounds.
c. 2,000 pounds.
d. 2,500 pounds.

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