Question

A bakery buys flour in 25-pound bags. The bakery uses 1,215 bags a year. Ordering cost is $10 per order. Annual carrying cost is $75 per bag. Determine the economic order quantity.

Answer 1

the economic order quantity is 18 units

Step-by-step explanation:

The computation of the economic order quantity is as follows

Economic order quantity is

`= \sqrt{(2 * annual\ demand * ordering\ cost)/(carying\ cost) } \\\\= \sqrt{(2* 1,215* \$10)/(\$75) }`

= 18 units

hence, the economic order quantity is 18 units

We simply applied the above formula so that the correct value could come

And, the same is to be considered