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\mathrm{.}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?