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Q. Trojan Sandwiches uses the same bread for all of its sandwiches ordered from Bakery XYZ. Bakery XYZ charges $5 for a loaf of its bread, from which 10 sandwiches can be made. Every shipment of bread from Bakery XYZ to Trojan Sandwiches costs $50. Trojan Sandwiches' current ordering policy is to have deliveries once every two weeks. They freeze bread to seal in freshness. Trojan Sandwiches estimates the annual holding cost for freezer space at $5 per loaf of bread. There is demand for 50 Trojan sandwiches every day. Assume 52 weeks in a year and 364 days in a year.
a. Illustrate what is the current total annual cost (purchase + setup + holding) of Trojan Sandwiches ordering policy?
b. Explain how many loaves of bread should Trojan sandwiches order at a time in order to minimize their annual order and storage costs?
c. Illustrate what is the total annual cost (purchase + setup + holding) under the ordering policy in part (b)? Explain how much money will Trojan sandwiches save each year by following the ordering policy in (b) compared to the current policy?
d. Explain how many times a year will Trojan sandwiches order bread under the ordering policy in part (b)? Explain how many days will there be between order placements?
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