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:

Phobic Behavior

An excessive and irrational fear response, usually triggered by a specific object or situation.

Response Prevention

Also known as flooding, a behavior therapy in which a phobia is eliminated by forced exposure to the feared stimulus without an aversive consequence.

Headbanging

Repetitive and deliberate striking of one's head against an object or surface, which can be a sign of distress, developmental disorders, or a form of self-injury.

Climbing Behavior

Can refer to the literal climbing activities of animals and humans or metaphorically to the behaviors used by individuals to "climb" socially or professionally.