(Appendix) Elke Ginter operates a health-food bakery that uses specially ground flour in its products. The bakery operates 360 days a year. Elke finds that she seems to order either too much or too little flour and asks for your help. After some discussion, you find she does not have any idea of when or how much to order. An examination of her records and Elke’s answers to further questions reveal the following information:

a. Calculate the economic order quantity for flour.

b. Calculate the optimal safety stock (in pounds) for flour.

c. Calculate the appropriate order point.

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Annual usage of flour Average number of days delay between initiating and receiving an order Estimated cost per order Estimated annual cost of carrying a pound of flour in inventory Estimated cost of a stockout 14,000 pounds 12 $8.00 $.25 $150.00