A Hotel Purchases 8,000 Gallons of a Cleaning Product

question 49

Essay

A hotel purchases 8,000 gallons of a cleaning product. Each gallon costs $10, and the cost of holding one gallon for a year is estimated to be $3. Ordering cost amounts to $30 per order.
a.If the hotel orders in lots of 500 gallons, how many orders does it place each year?
b.What are the ordering and holding costs, and total annual cost?
c.If the economic ordering quantity is used, how much improvement in cost will result?

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Definitions:

Guthrie

proposed the one-trial learning theory, emphasizing that a stimulus paired once with a response can establish a connection, in contrast to theories requiring multiple pairings.

Stimuli

External or internal factors that elicit responses from biological organisms.

Response

An action or change in behavior that occurs as a result of a stimulus.

Habit Method

A technique in behaviorism for forming or breaking habits through repeated practice and reinforcement.