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Calculate the total annual cost of ordering

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A large bakery buys flour in 20 kg bags. The bakery uses an average of 5,130 bags a year. Preparing an order, receiving the shipment, and paying the invoice costs $20 per order. Annual holding cost is $3 per flour bag.

a. Determine the economic order quantity. (Round the final answer to the nearest whole number.)

EOQ =?

b. What is the average number of bags on hand (i.e., average cycle inventory)? if EOQ is used? (Round intermediate calculations. Round the final answer to 1 decimal place.)

Average number of bags on hand =?

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

Orders per year =?.

d. Calculate the total annual cost of ordering and holding flour for EOQ. (Do not round intermediate calculations. Round the final answer to 2 decimal places.)

Total annual cost = ?

e. If ordering cost were to increase by 50 percent per order, by what percentage would the EOQ change? (Round intermediate calculations. Round the final answer to the nearest whole number.)

Percentage change = ?

Reference no: EM132708189

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