Question

A large bakery buys flour in 25-pound bags. The bakery uses an average of 4200 bags a year. Preparing an order and receiving a shipment of flour involves a cost of $10.70 per order. Annual carrying costs are $76 per bag. Determine the EOQ. (Keep two decimal places in your answer)

Answer 1

34

Step-by-step explanation:

Annual demand D = 4,200 bags

Ordering cost S = $10.70

Holding cost H = $76

Economic order quantity =
`\sqrt{2*D*S / H`

Economic order quantity =
`√(2*4200*$10.70 / $76)`

Economic order quantity =
`√(89880/76)`

Economic order quantity =
`√(1182.63)`

Economic order quantity = 34.389388

Economic order quantity = 34