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Question 1 A large rm uses an average of 40 boxes of copier paper per day. The rm operates 260 days a year.

Question 1

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.

Top Answer

TC = Q /2 * H + D/Q * S D = 40/day x 260 days/yr. = 10,400 packages            S... View the full answer

1 comment
  • Kindly ask for any clarification
    • urvu1982
    • May 14, 2018 at 4:48pm

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