Question: Open all year round except five days off during certain holidays, a bakery (Pide Inc.) buys flour in 25 kg bags at $50 per bag
Open all year round except five days off during certain holidays, a bakery (Pide Inc.) buys flour in 25 kg bags at $50 per bag from a local supplier. Pide uses an average of 50 bags of flour a month. Preparing an order, receiving the shipment, and paying the invoice costs $100 per order. The inventory carrying cost rate is 10%, and the order delivery lead time is 20 days.
- Currently, Pide places an order every month (call this policy A). Determine the current order size and the total inventory-related operating cost (i.e., the sum of annual ordering and carrying costs) of this policy.
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