A large bakery buys flour in 25-pound bags. It uses 3,000 bags each year and it operates 250 days per year. Ordering costs are $8 per order and the annual carrying cost per bag is $30.
a) What is the optimal order quantity?
b) How many orders will be placed each year?
c) What is the total annual ordering cost?
d) What is the average inventory level each year?
e) What is the total annual carrying cost?
f) If the lead time to receive a new order is 5 days, what is the reorder point?
Would i divide the demand with the rate to get the actual demand?