Mama Mia’s Pizza purchases its pizza delivery boxes from a printing supplier. Mama Mia’s delivers on-average 225 pizzas each month (assume deterministic demand). Boxes cost 43 cents each, and each order costs $12.50 to process. Because of limited storage space, the manager wants to charge inventory holding at 25 percent of the cost. The lead time is seven days, and the restaurant is open 360 days per year, assuming 30 days per month.
Use the EOQ Model Excel template in MindTap to determine the economic order quantity, reorder point assuming no safety stock, number of orders per year, and total annual cost.