Sumatra Bakery and Confectionery uses large quantity of flour in its manufacturing process. Annual

consumption of flour by Sumatra is estimated to be 3 million kilograms. Orders must be placed in

multiples of 1 thousand kilograms. The cost of carrying the inventory is Tk.10 per kilogram. Sumatra's

supplier for flour, Messrs Tara Flour Mill, sells the inventory to Sumatra at Tk45 per kilogram. The cost

of ordering the inventory is Tk.75 per order. On an average it takes Tara 3 days to deliver from the day it

receives order from Sumatra. However, there have been occasional delays in receiving delivery by a few

days. Therefore, Sumatra maintains a safety stock covering a 2 day's period of safety.

a.How much inventory of flour does Sumatra have to order to minimise on its total inventory cost?

b. How many orders does Sumatra have to make with Tara Flour per year?

C.Does Sumatra have any goods in transit? If so, how much?

d. At what level of stock in hand, should Sumatra place a new order?

e.What are Sumatra's average, maximum, and minimum values of inventory?