1. Cool Gelato uses various sizes of foam cups. The use of 8oz foam cups is pretty

steady throughout the year, and Cool Gelato expects to use a total of 35,000 units of

8oz cups in 2017. The cost of ordering and receiving the foam cups from the supplier is

$25, regardless of how many is ordered. It takes 3 days for the supplier to deliver the

foam cups to Cool Gelato each time. Cool Gelato pays $.50 per cup and estimates its

annual holding cost to be 25% of its wholesale value. Cool Gelato will operate 350 days

in 2017.

a. (2 points) What is the economic order quantity for the 8oz foam cups? The EOQ

should be an integer value. Round the answer to the nearest integer.

b. (2 points) How many times does Cool Gelato need to place orders in 2017 if they

use the EOQ? Round the answer to the nearest integer.

c. (2 points) How much inventory does Cool Gelato need to hold on average if they

use the EOQ? The answer is an integer value in this example.

d. (2 points) How much would the total annual cost for the 8oz cups be if they use the

EOQ? Use 4 decimal places for all intermediate calculations. Round your final

answer to the nearest integer.

e. (2 points) What is the reorder point (ROP)? The reorder point should be an integer

value.