A large law firm uses an average of 40 boxes of copier paper a day. The firm operates 260 days a year. Storage and handling costs for the paper are $30 a year per box, and it costs approximately $60 to order and receive a shipment of paper.
Re-solve the previous problem, the first two parts (What order size would minimize the sum of annual ordering and carrying costs?
Compute the total annual cost using your order size), under a $10 fixed cost of ordering (S).
Repeat for S = 20, 30, 40, . . . , 100.
Explain in a short paragraph or two, what happens to the optimal order quantity, the time between orders, and the average inventory as S decreases.