Gluten-free baked goods production

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Reference no: EM131782883

Honeywell Bakery buys teff flour for use in its gluten-free baked goods production at $4 per lb with an order cost of $15 and a lead time of 4 weeks. The flour is needed throughout the entire 52-week year, with an annual demand of 1,250 lbs. Honeywell's holding cost for teff flour is 90% of the item cost and they keep a safety stock of 55 lbs. (Note: 1 lb = 16 oz) a) Compute the optimal order quantity. (2 points) b) Compute the optimal order quantity if the price of teff flour changes to $10 per 60 oz. Is this order quantity different from the one in a? If so, explain the difference. (2 points) I'm trying to identify these variables and i'm not sure if their right. Annual Demand: 1250 lbs? Operates 52 Weeks Per Year Ordering Cost: $15 per order? Holding Cost: ? Lead Time: 4 Weeks? Cost Per Unit: $4?

Reference no: EM131782883

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