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The Bertin Breads Company buys and then sells 2.6 million bushels of wheat annually. The wheat must be purchased in multiples of 2, 000 bushels.
The Bertin Breads Company buys and then sells 2.6 million bushels of wheat annually. The wheat must be purchased in multiples of 2, 000 bushels. Ordering cost, which include grain elevator removal charge of $3, 500, are $5, 000 per order. Annual carrying costs arc 2% of the purchase price per bushel of $5. The company maintains a safety stock of 200, 000 bushels. The delivery time is 6 weeks. Required: What is the EOQ? At what the inventory level should a reorder be placed to prevent having to draw on the safety stock? What are the total inventory costs? The wheat processor agrees to pay the elevator removal charges if Bertin Breads will purchase wheat in quantity of 650, 000 bushels. Would it be to the firm's advantage to order under this alternative
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