- - 12.22 The catering manager of La Vista Hotel, Lisa Ferguson, is disturbed by the amount of silverware she is losing every week. Last Friday night. when her crew tried to set up for a banquet for 500 people, they did not have enough knives. She decides she needs to order some more silverware, but wants to take advantage of any quantity discounts her vendor will offer. For a small order (2.000 or fewer pieces), her vendor quotes a price of $1.80fpiece. Ifshe orders 2.0015.000 pieces. the price drops to $ 1 .60/ piece. 5,00110,000 pieces brings the price to $1.40/ piece, and 10,001 and above reduces the price to $1.25. Lisa's order costs are $200 per order, her annual holding costs are 5%, and the annual demand is 45,000 pieces. For the best option: a) What is the optimal order quantity? b) What is the annual holding cost? c) What is the annual ordering (setup) cost? (1) What are the annual costs of the silverware itself with an opti- mal order quantity? e) What is the total annual cost. including ordering, holding, and purchasing the silverware? W . . 12.2 Boreki Enterprises has the following 10 items in inven- tory. Theodore Boreki asks you, a recent OM graduate, to divide these items into ABC classifications. ITEM ANNUAL DEMAND COST/UNIT A2 3,000 $ 50 B8 4,000 12 C7 1,500 45 D1 6,000 10 E9 1,000 20 F3 500 500 G2 300 1,500 H2 600 20 15 1,750 10 J8 2,500 5 a) Develop an ABC classification system for the 10 items