Question: Solve the following problems using EOQ Model. 1. A toy manufacturer uses approximately 32,000 silicon chips annually. The chips are used at a steady rate

Solve the following problems using EOQ Model.

1. A toy manufacturer uses approximately 32,000 silicon chips annually. The chips are used at a steady rate during the 240 days a year that the plant operates. Annual holding cost is $ 3 per chips, and ordering cost is $ 120. Determine

a. The optimal order quantity

b. The number of workdays in an order cycle.

2. A large bakery buys flour in 25 kilogram bags. The bakery uses an average of 4,860 bags a year. Preparing an order and receiving a shipment of flour involves a cost of $ 10 per order. Annual carrying costs are $ 75 per bag.

a. Determine the economic order quantity.

b. What is the average number of bags on hand?

c. How many orders per year will there be?

d. Compute the total cost of ordering and carrying flour.

e. If ordering costs were to increase by $1 per order, how much would that affect the minimum total annual cost?

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