A printing company estimates that it will require 1,000 reams of a certain type of paper in

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Question:

A printing company estimates that it will require 1,000 reams of a certain type of paper in a given period. The cost of carrying one unit in inventory for that period is 50 cents. The company buys the paper from a wholesaler in the same town, sending its own truck to pick up the orders at a fixed cost of $20.00 per trip.

1. What is the Optimal Order Quantity?

2. Determine the Number of expected orders.

3. Calculate the Carrying cost.

4. Calculate the Setup cost.