EOQ

Regal bakery Limited is the main supplier of hard dough breads to customers in Montego Bay. The company currently makes 10,000,000 loaves of bread annually which uses baking flour. Production takes place evenly during the year. Each bread uses 0.0001 kilogram of baking flour and the baking flour is utilised evenly during the period. Regal sells hard dough bread for $290 per loaf. The production manager (Shannel Crooks) thinks that profits could be increased if the company departs from the current policy. Currently, the company makes four equal orders per year. That is, the entity orders four time annually and orders are made instantaneously without any delays.
However, the chief financial officer (CFO) does not believe that the current order quantity is the optimal order quantity. As a result, he spent $5,000.000 last year to ascertain whether the optimal order quantity is different from the current policy. Moreover, he held discussion with the main suppliers of baking flour and was told that the current purchase cost for baking flour is $100 per kilogram.
Further discussions indicated that the cost per kilogram varies based on the quantity to be bought. A 1% discount will be given for orders of at least 500 kilograms, 2.5% discount for orders of at least 750, a 5% discount for orders of at least 1,000 and a 10% discount for orders greater than 1,250 kilograms. It is also expected that orders will be made instantaneously and there will be no lead time between ordering and receiving the raw material. No discounts are given for orders of less than 500 kilograms.
It was further ascertained that the incremental ordering cost is to be $450 per order, while the cost of storing is to be $5 per unit of average stock. Additionally, the opportunity cost of holding one kilogram is expected by be 5% of the current purchase cost.
Required:
a. Calculate the EOQ based on the formula
b. Calculate the total cost based on the EOQ
c. Calculate the total cost for each individual alternate order quantities including the current policy.
d. Which order quantity is considered the optimal order quantity and why?