Answer:
The optimal number of pizza that Judith should order is 184.
Explanation:
Judith is introducing pizza in the cafeteria menu.
She is expecting a weekly demand of 10 pizzas.
The cafeteria is open 45 weeks a year.
The ordering cost of pizza for Judith is $15 and the holding cost is $0.40.
The annual demand for pizza
= [tex]45\ \times\ 10[/tex]
= 450
The optimal number of pizza will be the economic order quantity.
Economic order quantity can be defined as the optimal order quantity that a company should make to minimize its total cost of inventory.
Economic order quantity
= [tex]\sqrt{\frac{2\ \times\ Annual\ demand\ \times\ order\ cost}{Holding\ cost} }[/tex]
= [tex]\sqrt{\frac{2\ \times\ 450\ \times\ 15}{0.40} }[/tex]
= [tex]\sqrt{33,750}[/tex]
= 183.71
So the optimal number of pizza that Judith should order is 184.
