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The manager of whole foods currently sells wheat bread for $450 which Includes a mark-up of 25%. Each order is placed by a single
The manager of whole foods currently sells wheat bread for $450 which Includes a mark-up of 25%. Each order is placed by a single individual who charges an average rate of $50 per hour. which takes approximately 2% hours to finalize and place an order. The cost of holding one unit of inventory is $10 per unit. The company currently orders the flour in quantity of 31,250 lbs. which lasts for 6 weeks. The cost of the whole wheat flour is 65% of the cost price to make the wheat bread. Management has been contemplating if the current order size is ideal and has approached you to calculate the optimal order quantity Required Calculate the EOQ based on the formula (4 marks) Calculate the total cost based on the EOQ and the current policy (8 marks) id Calculate the savings if management uses the EOQ Instead of the current policy. (1 mark) ) State four (4) assumptions of the EOQ model. (4 marks)
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