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Management Studies

Problem

A large bakery buys flour in 25-pound bags. The bakery uses an average of 4,500 bags a year. Preparing an order and receiving a shipment of flour involves a cost of $10 per order. Annual carrying costs are $75 per bag.

a. Determine the economic order quantity. (Do not round intermediate calculations. Round your final answer to the nearest whole number.)

Economic order quantity bags

b. What is the average number of bags on hand?(Round your answer to the nearest whole number.)

Average number of bags

c. How many orders per year will there be? (Round your final answer to the nearest whole number.)

Number of orders per year

d. Compute the total cost of ordering and carrying flour. (Round your answer to 2 decimal places. Omit the "tiny_mce_markerquot; sign in your response.)

Total cost $

e. If holding costs were to increase by $9 per year, how much would that affect the minimum total annual cost? (Round intermediate order qty to nearest whole number and round your answer to 2 decimal places. Omit the "tiny_mce_markerquot; sign in your response.)

Increase by $

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M92759032

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