6-1. Basic EOQ Question: The inventory manager of ABC, Ltd., wants to order flour for its bakery in a cost effective manner. The bakery uses an average of 12,000 bags a year. Preparing an order and receiving a shipment of flour involves a cost of $40 per order. Annual carrying costs are $37.50 per bag. REQUIRED: a. Determine the economic order quantity. b. What is the average number of bags on hand? c. How many orders will there be per year? d Compute the total cost of ordering and carrying flour per year. e. If ordering costs were to increase by $2 per order, how much would that affect the minimum annual total cost? Hint: Compute a new EOQ first. Then total cost. 6-2.BASIC EPQ QUESTION: A company is about to begin production of a new product. The manager of the department that will produce one of the components for the product wants to know how often the machine used to produce the item will be available for other work. The machine will produce the item at a rate of 80 units a day. Fifty units will be used daily in assembling the final product. Assembly will take place five days a week, 50 weeks a year. The manager estimates that it will take almost a full day to get the machine ready for a production run, at a cost of $200. Inventory holding costs will be $10 per year