1. An architect firm uses an average of 60 boxes of copier paper a day. The firm operates 260 days a year. Storage and handling costs for the paper are $30 a year per box, and its costs approximately $60 to order and receive a shipment of paper.
2. (a)What quantity order size would minimize the total annual inventory cost? ________________________________________________________________________________
3. (b)Determine the minimum total annual inventory cost. ________________________________________________________________________________
4. (c)The office manager is currently using an order size of 300 boxes. The partners of the firm expect the office to be managed "in a cost-efficient manner." Would you recommend the manager to use your quantity from part (a) rather than 300 boxes? _______.
5. Justify your answer (by determining the total annual inventory cost for 300 boxes): ________________________________________________________________________________