Problem

A local office supply store has an annual demand for 30,000 cases of photocopier paper per year. It costs $\$ 3$ per year to store a case of photocopier paper, and it costs $\$ 70$ to place an order. Find the optimum number of cases of photocopier paper per order.
A. 837
B. $1,400,000$
C. 1,183
D. 374

Answer

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Answer

Final Answer: The optimum number of cases of photocopier paper per order is \(\boxed{1183}\).

Steps

Step 1 :The problem is asking for the optimal order quantity, which is a common problem in inventory management. The Economic Order Quantity (EOQ) model is typically used to determine the optimal order quantity that minimizes total inventory costs.

Step 2 :The EOQ formula is: \[EOQ = \sqrt{\frac{2DS}{H}}\] where: D is the annual demand, S is the order cost, and H is the holding cost per unit per year.

Step 3 :In this case, D = 30,000 cases, S = $70, and H = $3. We can substitute these values into the EOQ formula to find the optimal order quantity.

Step 4 :Substituting the given values into the formula, we get: \[EOQ = \sqrt{\frac{2*30000*70}{3}}\]

Step 5 :The result from the calculation is approximately 1183.22. This means that the optimal order quantity is about 1183 cases of photocopier paper. However, since we cannot order a fraction of a case, we should round this number to the nearest whole number.

Step 6 :Final Answer: The optimum number of cases of photocopier paper per order is \(\boxed{1183}\).

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