A large law firm uses an average of 11 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 $9 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

Yes

No

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?

multiple choice

Yes

No