Problem 13-4 A large law firm uses an average of 34 boxes of copier paper a day.
ID: 445568 • Letter: P
Question
Problem 13-4
A large law firm uses an average of 34 boxes of copier paper a day. The firm operates 264 days a year. Storage and handling costs for the paper are $29 a year per box, and it costs approximately $61 to order and receive a shipment of paper.
What order size would minimize the sum of annual ordering and carrying costs? (Round your answer to the nearest whole number.)
Compute the total annual cost using your order size from part a. (Round intermediate calculations and final answer to 2 decimal places. Omit the "$" sign in your response.)
Except for rounding, are annual ordering and carrying costs always equal at the EOQ?
The office manager is currently using an order size of 203 boxes. The partners of the firm expect the office to be managed "in a cost-efficient manner." compute total cost for this current order size. (Round intermediate calculations and final answer to 2 decimal places. Omit the "$" sign in your response.)
Would you recommend that the office manager use the optimal order size instead of 203 boxes?
A large law firm uses an average of 34 boxes of copier paper a day. The firm operates 264 days a year. Storage and handling costs for the paper are $29 a year per box, and it costs approximately $61 to order and receive a shipment of paper.
Explanation / Answer
basic Information
D = 34 /day x 264 days/yr. = 8976 packages
S=$29 H=$61
a)
b)
Total annual Cost : TC = q/2 * H + D/Q*S
92/2*61 + 8976/92*29 = 2806 + 2829.4= 5635.4
c) Yes
d.1) TC= 203/2*29 + 8976/203*61 = 2944 + 2697.2= 5641.2
d 2) Yes