My office consumes 500,000 specialized sheets of fine ivory paper every year. My office supplier can supply a maximum of 5000 sheets of that paper per day. Each paper costs $20. Processing an order is an involved and time consuming process and it costs $1500 to process each order. Storing this paper requires a specialized facility and holding costs are 32%. Assume a lead time of one week and that there are 250 working days in a year.
a. What order quantity minimizes my total inventory costs?
b. What is the average inventory held during the year?
c. What is the time between orders?
d. What is the reorder point?
e. How many orders are placed in a year?
f. If it takes 0.5 cubic foot to store one sheet of paper, how large (in cubic feet) should the storage space be to accommodate the maximum quantity that I can hold?