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Use the information below to answer questions 1-3. Office Supply House purchases 4,160 reams of paper per year, ordered in lots of 80 reams per
Use the information below to answer questions 1-3. Office Supply House purchases 4,160 reams of paper per year, ordered in lots of 80 reams per week. The vendor covers all shipping costs. Office Supply House is not required to inspect the shipment upon entry. Office Supply House earns 20% on its cash investments. The purchase-order lead time is two weeks. The following cost data are available: \begin{tabular}{|l|r|} \hline Relevant ordering costs per purchase order & $53.75 \\ \hline Relevant insurance, materials handling, breakage, & \\ and so on, per year \end{tabular} 1) What is the economic-order quantity? A) 324 reams B) 110 reams C) 100 reams D) 114 reams E) 235 reams 2) What are the total relevant inventory costs at the economic-order quantity? A) $4,862.84 B) $4,975.86 C) $3,948.50 D) $6,238.62 E) $3,913.65 3) What are the total relevant costs assuming the quantity ordered equals 80 reams? A) $3,913.65 B) $3,948.50 C) $5,326.49 D) $4,075.25 E) $4,165.00
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