Question: 3. a) High Riser Ltd uses multigrain wheat flour in the production of its bread. The following information has been provided in respect to the

3. a) High Riser Ltd uses multigrain wheat flour in the production of its bread. The following information has been provided in respect to the flour used in production:

Amount required 250,000 kg per year

Working days 365

Purchase price $10.00 per kg

Cost of placing order $14.00

Carrying cost $1.80 per kg per year, plus an imputed interest cost on the funds

invested in inventory of 12 per cent per year.

What quantity of inventory should be ordered? [2 marks]

What is the total cost per year of the inventory if you employ the order quantity derived in part (a)? [3 marks]

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