A large law firm uses an average of 10 packages of copier paper a day. Each package contains 500 sheets. The firm operates 270 days a year. Holding cost for the paper is $1 per year per package, and ordering cost is $6 per order.

a. What order quantity would minimize total annual ordering and holding cost? (Round the final answer to the nearest whole number.)

EOQ packages=?

b. Calculate the total annual inventory control cost using your order quantity from part a. (Round the final answer to 2 decimal places.)

TC $ =?

c. Except for rounding, are annual ordering and holding costs equal at the EOQ?

multiple choice 1 Yes No

d. The office manager is currently using an order quantity of 120 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 120 packages?

multiple choice 2 Yes No