You are the owner ofa cafe in a trendy suburb of Sydney.As part ofyour business, you sell ice cream cakes that you buy from your regular supplierCake King"The owner of"Cake King"has decided to close down the business and move to the Gold Coast for retirementYou now have to choose between two alternative suppliers"Mario's Fine Cakes andLuigi's Baked Goods" The annual demand for ice cream cakes is 100.Cakes don't have any direct holding costs (the fridges remain on for other products)but you can assume that the opportunity cost of holding any type of inventory is 10% per annum(cash that could be invested). The two suppliers have provided you with the following information: Mario: charges $45/cake and incurs a fixed ordering cost of $20 every time an order is made.The shelflife ofa cake is 0.25 years and the minimum order size is 10 cakes.

Luigi: charges $50/cake and incurs a fixed ordering cost of$10 every time an order is made.The shelf life of a cake is 0.18 years, and the minimum order size is 20 cakes.

Based on a detailed calculation and using the EOQ modelwhich manufacturer should be chosen by your cafe?