Reference no: EM132236166

Tuff Bread Company sells 20,000 loaves of bread per year. The holding costs are high, being that bread will spoil after a relatively short shelf life and then all opportunity for profit is lost.

For each batch of bread it costs Tuff Bread Company $42.50 for equipment cleaning and preparation work. It costs $5.75 per loaf to hold as inventory, which is 80% of the costs it takes to make it.

Tuff Bread Company has determined that it works best to create a batch of bread every week to keep a steady flow of fresh bread being they ideally would like to have the bread sold off the shelves every week, however the bread will last 3 weeks without spoilage. For efficient use of their oven it works best to keep batches in series of 100 loaves so they fit on the trays without waste. Their oven will hold up to 10 trays at once, but they never fill the oven because that much bread baked at once will cause spoilage before it is consumed. They are not sure how this effects lot size costing. State any assumptions you may have in the project.

1) What would you recommend for an Economical Ordering Quantity? Figure this out in Excel and submit it canvas.

2) Include a scatter plot for a visial aid, within your Excel file.

3) By hand; use the EOQ Formula to figure out the "Exact" economic ordering quantity (regardless of lot size). Include this in a tab within excel or a separate file attachment in canvas.