El Bohio SJ, a popular spot in Piñones that made a famous dish, \'alcapurria\',
ID: 353747 • Letter: E
Question
El Bohio SJ, a popular spot in Piñones that made a famous dish, 'alcapurria', uses 20 pounds of plantain each day in alcapurrias. Order costs for plantains 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 alcapurria itself costs $3.00 per pound. If the owner were to order 80 pounds of plantains at a time, what would be the average total daily costs, including the cost of the plantain?
$60.00
$63.20
$64.00
$64.10
$65.00
$60.00
$63.20
$64.00
$64.10
$65.00
Explanation / Answer
Given
Daily demand d = 20 pounds
Annual demand D = 20*365 days = 7300 pounds
Ordering cost S = 10
Cost C = $3
Holding cost H = 0.04 dollar per pound per day = 0.04*365 = 14.65 dollar per pound per year
Order quantity Q = 80 pounds
Annual total cost = Annual purchasing cost +Annual ordering cost + Annual holding cost
= CD + (D/Q)S +(Q/2)H
Annual total cost = 3*7300 + (7300/80)*10 + (80/2)*14.65 = 21900 + 912.5 + 584 = 23396.5
Average total daily costs = 23396.5/365 = 64.1
Average total daily costs = 64.10
64.10
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