An Office Supply Company Is Attempting to Determine the Order

question 22

Multiple Choice

An office supply company is attempting to determine the order quantity for laser printer toner cartridges which are sold to local businesses. Annual demand is 20,000 units and each cartridge costs the store $25. It costs $30 to place an order and the inventory carrying cost rate is 25% of the value of the item. The following spreadsheet has been set up to solve the problem. What constraint would you impose on this problem to ensure that at least one order is placed per year? $$\begin{array} { | c | c | c | } \hline & \text { A } & \mathrm { B } \\\hline 1 & & \\\hline 2 & & \\\hline 3 & \text { Annual Demand: } & 20,000 \\\hline 4 & & \\\hline 5 & \text { Cost per Unit: } & \$ 25 \\\hline 6 & \text { Ordering Cost: } & \$ 30 \\\hline 7 & \text { Carrying Cost: } & 25 \% \\\hline 8 & & \\\hline 9 & \text { Order Quantity: } & 483.73 \\\hline 10 & & \\\hline 11 & \text { Total Cost: } & \$ 502,738.61 \\\hline\end{array}$$

• A) MAX B9
• B) B9 = 1
• C) B9 ? 1
• D) MIN B11

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Definitions:

Total Fertility Rate

The average number of children a woman is expected to have during her lifetime in a specific population.

Present Value

The present value of a future amount of money or series of cash flows, using a given rate of return.

Market Rate

The prevailing price or cost of products, services, or labor in a competitive marketplace as determined by supply and demand.

Interest

The cost of borrowing money, typically expressed as a percentage rate over a period of time, or the return on investment for savings.