Qhadeeja operates a health food bakery that uses a special type of ground flour in...
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Accounting
Qhadeeja operates a health food bakery that uses a special type of ground flour in one of
its high-margin products. The bakery operates 365 days a year. Qhadeeja finds that she
seems to order either too much or too little special flour and asks for your help. After
some discussion, you find that she has no idea of when or how much to order. An
examination of her records and answers to further questions reveal the following
information:
Annual usage of special flour
9,025 kg
average # of days between initiating and receiving an order
12
estimated cost per order
P25
estimated annual cost of carrying a kilo of flour in
inventory
P0.50
a.
Calculated the economic order quantity for flour.
b.
How many orders would Qhadeeja place under the EOQ policy? 9025 / EOQ
c.
Compute the annual ordering cost for the EOQ.
d.
Compute the annual carrying cost for the EOQ.
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