A large ﬁrm uses an average of 40 boxes of copier paper per day. The ﬁrm operates 260 days a year. Storage and handling costs for the paper are $30 a year per box, and it costs approximately $60 to order and receive a shipment of paper.
(a) What order size would minimize the sum of annual ordering and carrying costs?
(b) Compute the total annual cost using your order size from part a.
(c) What is the order cycle?
(d) How many times an order has to be placed to meet demand?
(e) Except for rounding, are annual ordering and carrying costs always equal at the EOQ?
(f) The oﬃce manager is currently using an order size of 200 boxes. The partners of the ﬁrm expect the oﬃce to be managed in a cost-eﬃcient manner.Would you recommend that the oﬃce manager use the optimal order size instead of 200 boxes? Justify your answer.
TC = Q /2 * H + D/Q * S D = 40/day x 260 days/yr. = 10,400 packages S... View the full answer
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- May 14, 2018 at 4:48pm