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Please provide analysis and show work too. Thank you! Question 2: Brookline Bakery is a commercial baker that sells baked goods such as cookies and
Please provide analysis and show work too. Thank you!
Question 2: Brookline Bakery is a commercial baker that sells baked goods such as cookies and muffins to a number of coffee houses and snack. Flour is an ingredient to many of their products so they use it at a fairly constant rate. They currently follow a policy of ordering 16,000 pounds every four weeks. (That is equivalent to 20 days since Chicagoland Sweets operates 5 days per week and roughly 250 days per year.) Their supplier sells flour in 50-pound bags at a price of $20 per bag. Brookline's management estimates that it cost $64 every time that they place an order for flour. Their cost of inventory is 25% per year. a) What are Brookline' annual inventory related costs (both holding and ordering) under their current policy? What are their inventory costs per unit sold (i.e., total inventory cost divided by the demand rate)? Can you suggest a better policy? Brookline has signed on a number of new accounts. Management estimates that they will need twice as much flour per week. The purchasing manager likes the simplicity of ordering once every four weeks and has suggested sticking to that schedule and just ordering a larger quantity each time. The head chef would prefer to order more frequently. She has suggested keeping the order quantity constant at 16,000 pounds and ordering once every two weeks. b) What are annual total inventory costs and inventory costs per unit sold under the purchasing manager's plan? Under the head chef's? c) What is the optimal order quantity? What are the resulting annual total inventory costs and inventory costs per unit soldStep by Step Solution
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