Answer:
a). Total annual demand=13 boxes
b). Material cost per bag=$1.60
Explanation:
a). The following expressions can be derived;
Total number of bags=number of bags per box×number of boxes
where;
Total number of bags=150 bags
Number of bags per box=12 bags
Number of boxes=n
Replacing;
150=12×n
12 n=150
n=150/12=12.5
Number of boxes =12.5 rounded to the nearest whole number=13
Total annual demand=13 boxes
b). Material cost per bag
Total material costs=(Cost per box×number of boxes demanded)+Ordering cost
Total material costs=(10.97×13)+75=$217.61
Additional cost=(10/100)×217.61=21.761
Total material costs=(217.61+21.761)=239.371
Material cost per bag=Total material cost/number of bags
where;
Total material cost=$239.371
Total number of bags=150 bags
replacing;
Material cost per bag=239.371/150
Material cost per bag=1.596 to nearest two decimal places=1.60
Material cost per bag=$1.60
