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Paper Company Inventory Management and Economic Order Quantity (EOQ)

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A paper company uses approximately 1000 cartons of paper a month. The company charges $30 delivery charge per order. The company charges $1.50 per carton per month to cover storage, deteriation etc... Please see part 1 and 2. The instructions were to fill out the table.

Part 1.

Order size 100 200 250 500

Order per month 10 5 4 2

Total order cost 300 150 120 60

Average inventory ? ? ? ?

Total carrying Costs ? ? ? ?

Total inventory costs ? ? ? ?

Part 2. Calculate the economic order quantity?

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https://brainmass.com/business/business-calculus/paper-company-inventory-management-and-economic-order-quantity-eoq-42119

Solution Preview

I have attached the solution to your table as well as an explanation of economic order quantity.

A paper company uses approximately 1000 cartons of paper a month. The company charges $30 delivery charge per order. The company charges $1.50 per carton per month to cover storage, deterioration etc... Please see part 1 and 2. The instructions were to fill out the table.

Part 1.

Order size 100 200 250 500

Order per month 10 5 4 2

Total order cost 300 150 120 60

Average inventory ? ? ? ?

In the case of 10 orders per month the average inventory will be smaller than the case of 2 orders per month. So how many boxes are on hand per month given the order quantities and frequencies?

Lets say the month is divided into ten segments and we have a 30 day month then there are three days per ...

Solution Summary

The solution carefully explains how to compute each missing amount in the table, plus the calculation for EOQ.

$2.19
See Also This Related BrainMass Solution

Quality Control & Supply Chain Management

Locate a firm that incorporates the fixed order quantity system, fixed order period system, or a hybrid system to its management of inventory.

* Identify the type of inventory system it uses.
* Indicate the type of inventory issues the firm has such as stock out costs, carrying costs, order quantity issues, safety stock, and EOQ issue.
* In your opinion, is its system appropriate for the firm's business?

Firm used: United Stationers Supply Company
671 words

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