Question 1 (1 point) ^ ns The Frisbee Baking Division of Block C Enterprises bak

Question

Question 1 (1 point) ^ ns The Frisbee Baking Division of Block C Enterprises bakes and sells pies at the rate of 275 per day, 300 days per year. The ordering cost for the pie baking shells is $70, the holding cost for these shells is estimated to be $0.05 annually. Pie shells are available at the following prices: 1 questions saved e 1: Cost $0.16 $0.14 $0.12 $0.10 $0.08 Order size 1 to 10000 10001 to 15000 15001 to 20000 20001 to 25000 25001 and above gend Saved Response Unsaved Response Info Item Quiz Started Calculate the annual ordering cost for these shells

Explanation / Answer

Demand (D) = 275*300 = 82500

Holding cost (H) = 0.05

Ordering cost (S) = 70

EOQ = sqrt(2*D*S/H) = sqrt(2*82500*70/0.05) = 15,199

Total cost = Holding cost + Ordering cost + Demand*Price = EOQ/2*H + D/EOQ*S + D*P

For Q = 15,199,

= 15199/2*0.05 + 82500/15199*70 + 82500*0.12 = 10,660

For Q = 20001

= 20001/2*0.05 + 82500/20001*70 + 82500*0.10 = 9039

For Q = 25001

= 25001/2*0.05 + 82500/25001*70 + 82500*0.08 = 7456

Hence, best is to order 25001 units

Ordering cost will be: 82500/25001*70 = 231

Ans: 231

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