Question
2. A large law firm uses an average of 10 packages of copiers a day. Each package contains 500 sheets. The firm operates 260 days
2. A large law firm uses an average of 10 packages of copiers a day. Each package contains 500 sheets. The firm operates 260 days a year. Holding cost for the paper is $1 per year per package, and ordering costs is $10 per order. (10 Points)
a) What order quantity would minimize total annual ordering and holding costs?
b) Calculate the total annual inventory control cost using your order quantity from part a.
c) Except for rounding, are annual ordering and holding costs equal at the EOQ?
d) The office manager is currently using an order quantity of 100 packages. 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 quantity instead of 100 packages? Justify your answer.
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