Problem Set $10$

Note: You will find the Example videos in the module very helpful in answering these

questions. Please type in the space provided.

Question $1.$ A large Tampa investment firm uses an average of $50$ boxes of copier paper a

day to send trades and statements to clients. The firm operates $260$ days a year. Storage and

handling costs for the paper are $$30$ a year per box, and it costs approximately $$60$ to order

and receive a shipment of paper. Round to the nearest whole number $(50$ points, $10$ points

each$).$

a$.$ What order size would minimize the

sum of annual ordering and carrying costs

$($EOQ$)?$

b$.$ Compute the total annual cost using

your order size from part a$.$

c$.$ Except for rounding, are annual

ordering and carrying costs always equal

at the EOQ?

d$.$ The office manager is currently using

an order size of $200$ boxes. What is the

difference in total annual cost between

$200$ boxes and your answer to part a$,$

rounded to the nearest whole number?

e$.$ The partners of the firm expect the

office to be managed $$in a cost$-$efficient

manner.$$ Would you recommend that the

office manager use the optimal order size

instead of $200$ boxes? Justify your

answer