Q1: Alfred operates a factory that manufactures bread and cakes. One of the major raw materials used is organic maize, which he buys for $5 per kilogram. The factory operates for 350 days each year. The following information has been provided:

Annual usage of maize

80 000 kilograms

Average time between placing and receiving order

4 days

Estimated cost of ordering and receiving inventory (per order)

$8

Estimated annual cost of carrying a kilogram of maize in stock

$0.50

Required:

Use the above data to calculate

(a)economic order quantity (EOQ) (7 marks)

(b)number of orders per year. (3 marks)

Q2: Describe the four types of quality costs and provide examples.When managing the costs of quality, explain why it is not necessarily a problem if appraisal costs and prevention costs increase. ( 10 marks)