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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

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 or fewer
pieces), her vendor quotes a price of $1.70? piece. If she orders
5,001-8,000 pieces, the price drops to $1.60/piece.8,001-12,000
pieces brings the price to $1.50/piece, and 12,001 and above
reduces the price to $1.40? piece. Lisa's order costs are $150 per
order, her annual holding costs are 20%, and the annual demand is
85,000 pieces. For the best option:
a) What is the optimal order quantity?
b) What is the total annual cost, including ordering, holding, and
purchasing the silverware (with the optimal order quantity)?
$121,742.55
$142,586.91
$112,556.84
$182,546.45
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