Please refer to screenshot for question Transcribed Image Text: Use the following information to answer questions 11 and 12:
Friedrichs Bakery (Friedrichs) bakes and sells bread and biscuits. Friedrich uses a lot of free-
range eggs (eggs) in his bakery and is trying to figure out what the most economic order quantity
will be. Friedrich estimated that he will need on average 80 eggs per day for the 250 days that he
intends to bake during the 2021 financial year. He also calculated that it costs him R0,05 per egg
per annum to keep the eggs fresh and safely stored. Friedrich is requiring a returm of 10% per
annum on his investment in the business and purchases the eggs at R3,00 each.
s friend, Tsakane, gives Friedrich a discounted rate of R50 ordering cost for each order that
Friedrich places at Tsakane Farming. Friedrich buys all the required eggs exclusively from Tsakane
Farming and incurs no internal ordering costs other than the discounted cost per order charged by
Tsakane.
Tsakane Farming uses custom-made packaging cartons that are not similar to the traditional half-a-
dozen or full-dozen size egg cartons. As such, Tsakanes packaged eggs per order are therefore
not necessarily divisible by six.
QUESTION 11
The budgeted Economic Order Quantity (EOQ) for eggs is.
6 325
(1)
(2)
(3)
(4)
11 547
1 690,31
2 391
QUESTION 12
Assuming eggs are ordered in arbitrary order sizes of 500 eggs per order, which one of the
following statements is correct if all the other variables remain as given in the scenario?
(1)
The annual carrying cost will be R50.
(2)
(3)
(4)
Friedrich will have to place 250 orders during the 2021 financial year.
The average inventory on hand is 250 eggs.
The total ordering cost for the year will be R25 000.1
