One large bakery still receives flour in 25-pound bags from their own company's warehouse. They use an average of 5500 bags a year. The production step that uses these bags use 35 bags per day while the usage is 16 bags per day. It costs $12.00 to configure the machines for each run. Annual carrying costs are $7.50 per bag. What will be their average number of bags on hand if they request the EPQ bags in each order

48.87 bags

Explanation:

First, we need to calculate the EPQ as follow

EPQ =

Where

D = Annual Demand = 5500

S = Setup cost = $12

H = Carrying cost = $7.5

d = Daily usage = 16

p = Daily production = 35

Placing value sinthe formula

EPQ =

EPQ =

EPQ =

EPQ = 180.06

Now Calculate the average number of bags in hand as follow

Average Number of Bags =

Placing values in the formula

Average Number of Bags =

Average Number of Bags = 48.87

hopefull this will you!

the business rule that governs the relationship is one-to-many as there are multiple customers for each agent.