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A large bakery buys flour in 20-pound bags. The bakery uses an average of 1150 bags a year. Preparing an order and receiving a shipment of flour involves a cost of $20 per order. Annual Carrying costs are $ 60 per bag.
a) Determine the economic order quantity?
b) What is the average number of bags on-hand?
c) How many orders per year will there be?
d) Compute the total cost of ordering and carrying flour?
e) If holding costs were to increase by $5 per year, how much would the minimum total annual cost?
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