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The student advisement office at the University has a student worker who copies and assembles a handbook for students whenever the supply of these runs low. Past observations indicates that these handbooks are given out at the rate of 4 per day. The student worker can copy and assemble 100 per eight-hour day. The student worker is paid 3.75 $/hour and it takes .5 hour to prepare everything to produce a batch of handbooks. The cost of carrying inventory is related to handbooks that are damaged or become obsolete due to changes in the degree requirements. On average, 10% of all handbooks become unusable, and each costs $1 in materials, labor and copying costs.
a) If the office is open 250 days/year, how many handbooks should the student worker produce at a time in order to minimize costs?
b) How many days of demand will be supported by this order quantity?
c) What will be the maximum handbook inventory, assuming the minimum is zero?
d) What is the average inventory of handbooks?
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