You own a store that sells steak. The estimated weekly demand for steak is estimated to be D(p)=300-5p pounds, where p is the price per pound. The cost of purchasing one pound of steak from your supplier is $15. Your store has enough capacity for 200 pounds of steak in special controlled temperature rooms. Maintaining these rooms costs you $2000 per year. Unfortunately, due to the high standards of your clientele, the steak can stay in your warehouse for at most one week. Shipping from your supplier costs $3 per pound with a fixed cost of $100 per shipment.

a. What is the optimal price?

b. How much are your annual Ordering (Setup) costs?

c. How much are you paying on purchasing the steak in a year?

d. Are you using your full warehouse potential in storing the steak?

For the remaining questions assume that you keep the same price as in (a). You are considering an alternative business model where the meat can be stored by a company in shared rooms and charge you $2 per pound per year for storing. With this new business model..

e. Did your purchasing or ordering cost change?

f. How much do you pay in storage?