Tyler decided to open a bakery because everyone he knew told him that his baked goods were "out of this world." He had a little bit of a business school background because he got his Bachelor's from SPS at UIW recently. He remembered his teacher telling him that inventory models can be used for both the raw materials as well as the finished products for a business like his. So, he decided to see if he could use the basic EOQ model for identifying how much quantity to order of raw materials such as eggs, flour, sugar, etc. To get started, he decided a model for flour based on the information he had on hand regarding potential costs as follows:

• Usage per month 100 lbs
• Purchase cost $1 per lb.
• Order cost $10.00 per order sent
• Annual Holding Rate 10% of purchase price per lb.
• 52-week year 300 working days per year
• Lead time 2 days

Fill in the following table based on this information:

Optimal Inventory Policy
Economic Order Quantity Q*		lbs.
Annual Inventory Holding Cost H		dollars
Annual Ordering Cost O		dollars
Total Annual Cost TC		dollars
Maximum Inventory Level Q		lbs.
Average Inventory Level Q/2		lbs.
Reorder Point r		lbs. left
Number of Orders Per Year (D/Q*)
Cycle Time (Days) T		days