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Determine the minimum total annual inventory cost

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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.

Required -

(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)?

Reference no: EM132482145

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