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A deli orders three different types of patties (vegan, tuna, and beef) from a local manufacturer for use in sandwiches. The demand for vegan, tuna, and beef patties is 5, 30, and 125 per week, respectively. The order placement is rather easy; the store manager just goes to the manufacturer and collects as many patties as he wants. Fixed trucking cost is $15 of which $2 is the cost of placing the purchase order and $13 is the fixed cost of a truck delivery. The holding cost of these patties to be $0.80/patty/year,
a) Determine EOQ and optimal order intervals, and annual costs for each patty. What fraction of the total annual cost consists of fixed trucking cost?
b) Using a week as a base period, round the orders to nearestpower of 2. If you charge the fixed trucking fee only once for deliveries that coincide what is the annual cost now?
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