A large law firm uses an average of 80 boxes of copier paper a day. The...

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General Management

A large law firm uses an average of 80 boxes of copier paper aday. The firm operates 300 days a year. Storage and handling costsfor the paper are $2 a year per box, and it costs approximately $12to order and receive a shipment of paper.
1. What order size would minimize the sum of annual ordering andcarrying costs?
2. Compute the total annual cost using your order size from theprevious part.
3. Except for rounding, are annual ordering and carrying costsalways equal at the EOQ?
4. The administrative director is currently ordering batches of200 packages. The partners of
the company expects the office to be managed effectively. Do youbelieve that the
director should use the optimal order size rather than batches of200 packages?
Justify your answer.

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3.6 Ratings (391 Votes)

ANNUAL DEMAND 24000 ORDERING COST 12 HOLDING COST 2 1 EOQ SQRT2 ANNUAL DEMAND ORDERING COST HOLDING COST PER UNIT SQRT2 24000 12 2 537 2 ANNUAL HOLDING COST See Answer

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