Quick-Copy Duplicating Company uses 110,000 reams of standard-size paper a year at its various duplicating centers. Its current paper supplier charges $2.00 per ream. Annual inventory carrying costs are 15 percent of inventory value. The costs of placing and receiving an order of paper are $41.25.
Assuming that inventory replenishment occurs virtually instantaneously, determine the following:
a. The firm's EOQ
b. The total annual inventory costs of this policy
c. The optimal ordering frequency
d. Compute and plot ordering costs, carrying costs, and total inventory costs for order quantities of 2,000, 4,000, 5,000, 5,500, 6,000, 7,000 and 9,000 reams. Connect the points on each function with a smooth curve, and determine the EOQ from the graph (and the table used in constructing the graph).