You sell 25,000 loaf of bread per year. The carrying cost associated the main ingredient wheat flour is estimated to be $8 per unit (amount used for 1 loaf of bread) per year, and the ordering cost is $10 per order. And assume 1 year is 300 days and lead time is 3 days. Required:
a. What is the EOQ?
b. How much money you will lose if you order 300 units of wheat flour? Calculate the total cost of inventory with EOQ model and with order size is 300. The difference will give you the answer.
c. Calculate the re-order point (assuming no uncertainty)?

Annual Demand (D) = 25000

Carrying Cost (H) = 8

Ordering Costs (S) = 10

Number of working days = 300

Lead Time (Lt) = 3 days

a. EOQ = Sqrt (2*D*S/H)

EOQ = Sqrt (2*25000*10/8)

EOQ = Sqrt (62500)

EOQ = 250

b. Total Cost = (D * S) / EOQ + (EOQ * H) / 2

Total Cost = (25000 * 10) / 250 + (250 * 8) / 2

Total Cost = 1000 + 1000

Total Cost = 2000

Now, we calculate total Cost with order size: of 300

Total Cost = (25000 * 10) / 300 + (300 * 8) / 2

Total Costs = 833.3333 + 1200

Total Cost = 2,033.3333

The amount to lost if we order 300 units of wheat flour is as follows

= 2033.33 - 2000

= $33.33

3. ROP = (D / Number of working days) x Lt

ROP = (25000 / 300) * 3

ROP = 83.3333 * 3

ROP = 249.9999

ROP = 250

you will have $2593.74 in 10 years if you set aside $1,000 at 10%

you will have $9321.91 in 20 years if you set aside $2000 at 8%

you will have $1469.32 in 5 years if you set aside $1000 at 8%

you will have $1296.87 in 10 years if you set aside $500 at 10%

you will have $239.66 in 15 years if you set aside $100 at 6%

you will have $4660.96 in 20 years if you set aside $1000 at 8%

a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.