EOQ

Suzie Sushi needs rice as a vital ingredient for all their offerings. It usually takes $75$ g of rice to create a standard sushi box, their flagship product. Each week, they deliver $3250$ boxes to customers in offices around the CBD$.$

Rice costs $$1\mathrm{.}62$ per kg$,$ and each order costs them $$35($including internal administrative costs and supplier$$s delivery charges$).$ The inventory holding cost is estimated at $18\%$ annually, covering storage and finance$-$related expenses.

For planning purposes, assume $52$ weeks in a year.

$1\mathrm{.}1.$ What is the optimal order quantity? Please provide your answer in kg $($rounded to the nearest integer$).[1]$

$1\mathrm{.}2.$ The supplier has requested that you order in multiples of $100$kg $($instead of $1$kg$)$ and suggests you round up your order.

$1\mathrm{.}2\mathrm{.}1.$ Why would rounding up instead of regular rounding be recommended? $[1]$

$1\mathrm{.}2\mathrm{.}2.$ Which rounding should you apply in your case if you accept this request? $[1]$

$1\mathrm{.}2\mathrm{.}3.$ What is the impact on the total relevant cost due to this request? $[1]$

$1\mathrm{.}3.$ You don$$t want to change your ordering process and have convinced the supplier to stick to delivery in multiples of $1$kg$.$ A team member pointed out that these calculations are missing the $50$ boxes they regularly donate to a food bank on Friday evenings. What is the impact on the total relevant cost computed in $(2)$ due to this oversight if you continue with the earlier order quantity? Please mention the percentage value, rounded to the nearest integer. $[1]$

$1\mathrm{.}4.$ The admin staff has suggested that we designate Mondays as the $$Ordering Day$$ and improve their efficiency. You want to explore using the $$Power of $2$ strategy to place orders. Please include the additional boxes to charity in your assessment. What is the recommended frequency of placing orders with this approach? Please mention the number of weeks between successive orders. $[1]$

$1\mathrm{.}5.$ The supplier has indicated that orders not in multiples of $10$kg will incur a packing surcharge of $$5,$ and orders beyond $1000$ kg will incur a surcharge of $$20$ as they need a more sturdy delivery van. To sweeten the deal, they offer an incremental discount on the cost of rice: $3\%$ off anything above $1000$kg and $5\%$ off anything above $2000$kg$.$ Please include the additional boxes to charity in your assessment and use the $$Power of $2$ strategy for weekly ordering. What is the recommended optimal order quantity? $[1]$