5** Bakery is a firm that produces and sells flour-based food baked in an oven such as bread, cookies, cakes, pastries, and pies. The finance manager of the firm gets the following inventory information regarding flour:

annual inventory usage is 45,000 kg;

the carrying cost is 5% of the purchase price of the goods;

the purchase price of the goods is $15.2 per kg;

the ordering cost is $150 per order;

the desired safety stock, which does not include delivery-time stock, is 200 kg.

orders of flour must be placed in round lots of 100 kg;

delivery time is 2 weeks;

Assume a 52-week year in the calculations. Required:

(a) Determine the economic order quantity of flour for the company.

(b) Determine the average inventory level of flour for the company.

(c) Determine the inventory level at which a reorder should be made.

(d) Critically discuss two questionable assumptions behind the calculations above. (word limit: 150 words)

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