A Printing Company Estimates That It Will Require 1,000 Reams

question 32

Essay

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, what is the optimum number of reams to buy at one time?
How many times should lots of this size be bought during this period?
What is the minimum cost of maintaining inventory on this item for the period?
Of this total cost, how much is carrying cost and how much is ordering cost?

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Definitions:

Limited Budget

A constrained amount of financial resources allocated for specific purposes, necessitating careful planning and prioritization of expenditures.

Print Distribution

The process of disseminating written or printed material to a wide audience, typically through physical means.

Direct Approach

A communication style that is straightforward and to the point, often used to address a specific topic or request immediately.

Recommendations

Advised courses of action or opinions about someone or something, typically based on experience or expertise.