Question

A large law firm uses an average of 40 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. (a) What quantity order size would minimize the total annual inventory cost? ______________________________________________________________________________ (b) Determine the minimum total annual inventory cost. ______________________________________________________________________________ (c) The office manager is currently using an order size of 240 boxes. The partners of the firm expect the office to be managed "in a cost-efficient manner." Would you recommend the office manager use 240 boxes rather than your answer from part (a)? _______. Justify by considering the total annual inventory cost: ___________________________________ ______________________________________________________________________________

Answer 1