# solution

Q The operator of a concession at a downtown location estimates that he will sell 420 bags of circus peanuts during a month. Holding costs (annual) are 43 percent of unit price and ordering cost is \$13. The price schedule for bags of peanuts is 1 to 199, \$2.5 each; 200 to 499, \$2.46 each; and 500 or more \$2.39 each. What order size would be most economical? a. 457 b. 131 c. 132 d. 104

Q) A manager intends to order a new machine and must now decide on the number of spare parts to order along with the machine. The parts cost \$481 each and have no salvage value. The manager has compiled the frequency distribution for the probable usage of spare parts:9 spare parts with frequency 0.09;10 spare parts with frequency 0.06;11 spare parts with frequency 0.15;12 spare parts with frequency 0.22; and 13 spare parts with frequency 0.48. For what range of shortage costs would stocking 11 spare parts constitute an optimal decision? a. Between 127.3and 309.2 b. Between 84.88and 206.1 c. Between 101.9and 247.4 d. Between 42.44and 103.1

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