IM. 72 The Candy Shack has a monthly demand of 150 bags of Watermelon Slices. They pay $10.97 for each box of candy which contains 12 bags for sale. Their ordering costs are $75. Holding costs are negligible but they do pay 10% annually on the money they borrow to make such purchases. What is the annual demand-in terms of boxes? (Display your answer to the nearest whole number.) 150 What is the materials costs-per bag? (Display your answer to two decimal places.)

a). Total annual demand=13 boxes

b). Material cost per bag=$1.60

Explanation:

a). The following expressions can be derived;

Total number of bags=number of bags per box*number of boxes

where;

Total number of bags=150 bags

Number of bags per box=12 bags

Number of boxes=n

Replacing;

150=12*n

12 n=150

n=150/12=12.5

Number of boxes = 12.5 rounded to the nearest whole number=13

Total annual demand=13 boxes

b). Material cost per bag

Total material costs = (Cost per box*number of boxes demanded) + Ordering cost

Total material costs = (10.97*13) + 75=$217.61

Additional cost = (10/100) * 217.61=21.761

Total material costs = (217.61+21.761) = 239.371

Material cost per bag=Total material cost/number of bags

where;

Total material cost=$239.371

Total number of bags=150 bags

replacing;

Material cost per bag=239.371/150

Material cost per bag=1.596 to nearest two decimal places=1.60

Material cost per bag=$1.60