USE THE FOLLOWING INFORMATION FOR QUESTIONS 22 25 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 22 What is the EOQ for pepperoni a 1,000 pounds b 1,500 pounds c 2,000 pounds d 2,500 pounds 23 What is the total relevant cost (ordering cost carrying cost) for the year at an order size equal to the EOQ $500 $550 $600 $650 24 What is the total relevant cost (ordering cost carrying cost) for the year at an order size equal to 1,000 pounds $500 $550 $600 $650 If Ann Chovies, owner of the Perfect Pasta Pizza Parlor, decides to increase the number of pounds per purchase order, total carrying cost , total ordering cost , and the total cost of having to have an inventory HINT If it is not obvious, either draw a graph or make up numbers and compare your answer to the answer you got for question 23 A) decreases, increases, increases B) decreases, increases, decreases C) decreases, decreases, increases D) increases, decreases, decreases E) increases, decreases, increases

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USE THE FOLLOWING INFORMATION FOR QUESTIONS 22--25 Ann Chovies, owner of the Perfect Pasta Pizza Parlor, uses 20 pounds of pepperoni each day in preparing

USE THE FOLLOWING INFORMATION FOR QUESTIONS 22--25

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.

22. What is the EOQ for pepperoni?

a. 1,000 pounds.

b. 1,500 pounds.

c. 2,000 pounds.

d. 2,500 pounds.

23. What is the total relevant cost (ordering cost + carrying cost) for the year at an order size equal to the EOQ?

$500
$550
$600
$650

24. What is the total relevant cost (ordering cost + carrying cost) for the year at an order size equal to 1,000 pounds?

$500
$550
$600
$650

If Ann Chovies, owner of the Perfect Pasta Pizza Parlor, decides to increase the number of pounds per purchase order, total carrying cost __________, total ordering cost __________, and the total cost of having to have an inventory __________. HINT: If it is not obvious, either draw a graph or make up numbers and compare your answer to the answer you got for question 23.

A) decreases, increases, increases

B) decreases, increases, decreases

C) decreases, decreases, increases

D) increases, decreases, decreases

E) increases, decreases, increases