Appendix: EOQ Diane Delbert operates a health food bakery that uses a special type of ground flour in one of its high-margin products. The bakery operates 365 days a year. Delbert finds that she seems to order either too much or too little special flour and asks for your help. After some discussion, you find that she has no idea of when or how much to order. An examination of her records and answers to further questions reveal the following information: Annual usage of special flour (pounds) Average number of days delay between initiating and receiving an order Estimated cost per order 5,950 12 $32.00 Estimated annual cost of carrying a pound of special flour in inventory $0.50 a. Calculate the economic order quantity for flour. Note: Round your answer to the nearest whole pound. 873 pounds b. Assume that Delbert desires a safety stock cushion of seven days' usage. Calculate the appropriate order point. Note: Do not round until your final answer. Note: Round your final answer to the nearest whole pound.
Appendix: EOQ Diane Delbert operates a health food bakery that uses a special type of ground flour in one of its high-margin products. The bakery operates 365 days a year. Delbert finds that she seems to order either too much or too little special flour and asks for your help. After some discussion, you find that she has no idea of when or how much to order. An examination of her records and answers to further questions reveal the following information: Annual usage of special flour (pounds) Average number of days delay between initiating and receiving an order Estimated cost per order 5,950 12 $32.00 Estimated annual cost of carrying a pound of special flour in inventory $0.50 a. Calculate the economic order quantity for flour. Note: Round your answer to the nearest whole pound. 873 pounds b. Assume that Delbert desires a safety stock cushion of seven days' usage. Calculate the appropriate order point. Note: Do not round until your final answer. Note: Round your final answer to the nearest whole pound.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Please help me with part b. Can't seem to get the right answer and not sure what I am missing, thank you.
Transcribed Image Text:Appendix: EOQ
Diane Delbert operates a health food bakery that uses a special type of ground flour in one of its high-margin products. The bakery
operates 365 days a year. Delbert finds that she seems to order either too much or too little special flour and asks for your help. After
some discussion, you find that she has no idea of when or how much to order. An examination of her records and answers to further
questions reveal the following information:
Annual usage of special flour (pounds)
Average number of days delay between initiating and receiving an order
Estimated cost per order
5,950
12
$32.00
Estimated annual cost of carrying a pound of special flour in inventory
$0.50
a. Calculate the economic order quantity for flour.
Note: Round your answer to the nearest whole pound.
873
pounds
b. Assume that Delbert desires a safety stock cushion of seven days' usage. Calculate the appropriate order point.
Note: Do not round until your final answer.
Note: Round your final answer to the nearest whole pound.
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