A bakery buys sugar from a big distributor to use in baking cakes. Typically, they use...

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Finance

A bakery buys sugar from a big distributor to use in bakingcakes. Typically, they use 3663 bags of sugar in a year. The priceof sugar is typically $14 per bag. The cost to the bakery forplacing an order is $26, and the annual carrying cost is $17 perbag. The distributor has offered the bakery the following volumediscount schedule:
Order Size
Discount rate on the original price
1--449
0 percent
450--799
5 percent
more than 800
10 percent
We are trying to find how many bags ofsugar should the store order, whenever they place a new order ofsugar. Assume 364 days a year and 52 weeks a year.
IMPORTANT: Note, the discounts off of original price are reported.You need to calculate the actual prices.
If we ignore the discounts, how many bags of sugar should weorder?
Fill in the blanks
Order Quantity
Unit Price to Pay
Total Annual Inventory Related Cost
Quantity from EOQ model
Enough to get 5 percent discount
Enough to get 10 percent discount
Based on this quantity discount information, how may bags ofsugar should the store order?
How often (in "days") should the bakery order?

Answer & Explanation Solved by verified expert

4.4 Ratings (681 Votes)

Calculation of EOQCalculation of Unit price per pay and Annual Inventory relatedcostParticularsOrder SizeQNo of OrdersAQ bagsCost See Answer

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Transcribed Image Text

A bakery buys sugar from a big distributor to use in bakingcakes. Typically, they use 3663 bags of sugar in a year. The priceof sugar is typically $14 per bag. The cost to the bakery forplacing an order is $26, and the annual carrying cost is $17 perbag. The distributor has offered the bakery the following volumediscount schedule:Order SizeDiscount rate on the original price1--4490 percent450--7995 percentmore than 80010 percentWe are trying to find how many bags ofsugar should the store order, whenever they place a new order ofsugar. Assume 364 days a year and 52 weeks a year.IMPORTANT: Note, the discounts off of original price are reported.You need to calculate the actual prices.If we ignore the discounts, how many bags of sugar should weorder?Fill in the blanksOrder QuantityUnit Price to PayTotal Annual Inventory Related CostQuantity from EOQ modelEnough to get 5 percent discountEnough to get 10 percent discountBased on this quantity discount information, how may bags ofsugar should the store order? How often (in "days") should the bakery order?

Order Size	Discount rate on the original price
1--449	0 percent
450--799	5 percent
more than 800	10 percent

Order Quantity	Unit Price to Pay	Total Annual Inventory Related Cost
Quantity from EOQ model
Enough to get 5 percent discount
Enough to get 10 percent discount