Question

Libbey Hocking is the owner of the Hummingbird, an all‐organic restaurant featuring fresh salads and a variety of vegetarian entrée dishes. As part of a dining room redesign, she is replacing all of the glassware in her 100‐seat restaurant. Libbey would like to purchase 40 dozen glasses. Her glassware vendor has offered her similarly styled glassware at three different quality levels. The highest‐quality glassware would cost Libbey $50.00 per dozen. The average life expectancy of these glasses is 1,000 uses before they either break or chip. A lower‐priced, mid‐quality glass sells for $35.00 per dozen and has an expected life of 750 uses. The least expensive glasses sell for $26.00 per dozen and have an expected life of 500 uses. Help Libbey get more information to assess her best purchase choice by completing the following product cost comparison worksheet. (Spreadsheet hint: Format the “Per Use Cost” column to five decimal places). Hummingbird's Glassware Purchase Worksheet Product Durability Price per Dozen Number of Dozens Total Cost Total Number of Glasses Per Glass Cost Estimated Uses per Glass Per Use Cost Highest Middle Lowest Based on cost per use only, which quality glass should Libbey purchase? What nonpurchase price factors might influence Libbey's choice of glassware? If you were Libbey, which product alternative would you select? Explain your answer.

Answer 1

Hummingbird’s Glassware Purchase Worksheet
Product Durability	Price per Dozen	Number of Dozens	Total Cost	Total Number of Glasses Per Glass	Per glass cost	Estimated Uses per Glass	Per Use Cost
Highest	50	40	2000	480	$         4.17	1000	$   0.00417
Middle	35	40	1400	480	$         2.92	750	$   0.00389
Lowest	26	40	1040	480	$         2.17	500	$   0.00433
a) Based on cost per use only, which quality glass should Libbey purchase?
Libbey should purchase middle quality glass because is lcost per use is the lowest.
b) What non–-purchase price factors might influence Libbey’s choice of glassware?
Product durability
c)If you were Libbey, which product alternative would you select? Explain your answer
I would suggest the middle quality glass since its per use cost is the least .