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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. Treating this cost as the order cost,
1) What is the optimum number of reams to buy at one time?
2) How many times should lots of this size be bought during this period?
The reorder point is defined as the lead time demand for an item. In cases of long lead times, the lead time demand and thus the reorder point may exceed the economic order qu
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