Flanders Bar and Grill Orders Cleaning Supply Kits Using the EOQ

question 26

Multiple Choice

Flanders Bar and Grill orders cleaning supply kits using the EOQ model. The restaurant estimates that it uses 525 kits per year. The purchase price is governed by a quantity discount structure. If the restaurant orders 100 or more units, the price per kit is $11. Below 100 units, the price is $12 per kit. What is total annual cost at the optimal order quantity?

• A) $137.50
• B) $6437.48
• C) $68.74
• D) Total annual cost cannot be determined from the information given

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Definitions:

Loan

A sum of money that is borrowed, often from a bank, which is expected to be paid back with interest.

Personal Liability

The legal responsibility of an individual to bear financial costs associated with damages or legal proceedings.

Capital Contribution

Funds, property, or other assets contributed to a corporation or partnership by its owners or partners to support its operations.

Androgynous

Possessing or exhibiting both traditionally masculine and traditionally feminine qualities, traits, or characteristics.