Purchase Solution

Economic Order Quantity (EOQ): An Example

Not what you're looking for?

Ask Custom Question

A large bakery buys flour in 25-pound bags. The bakery uses an average of 4,860 bags a year. Preparing an order and receiving a shipment of flour involves a cost of $10 per order. Annual carrying costs are $75 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 ordering costs were to increase by $1 per order, how much would that affect the minimum total annual cost?

Purchase this Solution

Solution Summary

An inventory model example problem for finding economic order quantity or economic lot size with uniform rate of demand is done. Formulae for EOQ and Minimum average cost are given.

Purchase this Solution

Free BrainMass Quizzes
Terms and Definitions for Statistics

This quiz covers basic terms and definitions of statistics.

Know Your Statistical Concepts

Each question is a choice-summary multiple choice question that presents you with a statistical concept and then 4 numbered statements. You must decide which (if any) of the numbered statements is/are true as they relate to the statistical concept.

Measures of Central Tendency

This quiz evaluates the students understanding of the measures of central tendency seen in statistics. This quiz is specifically designed to incorporate the measures of central tendency as they relate to psychological research.

Measures of Central Tendency

Tests knowledge of the three main measures of central tendency, including some simple calculation questions.