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

Answer:

the economic order quantity is 18 units

Explanation:

The computation of the economic order quantity is as follows

Economic order quantity is

$= \sqrt{\frac{2 \times annual\ demand \times ordering\ cost}{carying\ cost} } \\\\= \sqrt{\frac{2\times 1,215\times \ 10}{\ 75} }$

= 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