Purchase Solution

Paper Company Inventory Management and Economic Order Quantity (EOQ)

Not what you're looking for?

Ask Custom Question

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?

Purchase this Solution
Solution Summary

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

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 ...

Purchase this Solution
Free BrainMass Quizzes
Production and cost theory

Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.

Income Streams

In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.

Introduction to Finance

This quiz test introductory finance topics.

Motivation

This tests some key elements of major motivation theories.

Employee Orientation

Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.

View More Free Quizzes
Related BrainMass Solutions

  • Manufacturing and Services of Southeastern Bell

    Economic Order Quantity (EOQ) EOQ is the equation related to the inventory in a business, through which the optimum level of order quantity is determined, where the organisation is directed with the adequate set of cost of production and other variables

  • Wholesaler Quality Control & Supply Chain Management

    quantity, the TSC decreases to a minimum cost and then increases This cost behavior is the basis for answering the first fundamental question: how much to order It is known as the economic order quantity (EOQ) United Stationers EOQ with their suppliers

  • Inventory Management - Ordering and Inventory

    166369 Inventory Management - Ordering and Inventory The Bozo Co is reviewing their inventory management techniques and have come up with the following data on their inventory.

  • Economic Order Quantity: Minimizing Ordering and Inventory Costs

    474888 Economic Order Quantity: Minimizing Ordering and Inventory Costs As the production manager, you need to minimize both ordering and inventory costs.

  • EOQ - Economic Order Quantity

    648582 EOQ - Economic Order Quantity A wholesale distributor of lenses and frames has been seeking to minimize its inventory costs and is planning to apply the economic order quantity model to its main product, lens blanks.

  • Calculating the EOQ and various inventory costs

    Solution describes the steps to calculate inventory costs and EOQ in the given case.

  • Important information about Economic Order Quantity (EOQ)

    Economic order Quantity (EOQ) = 200 cartons The solution calculates Orders per month, Total orders cost, Average inventory, Total Carrying costs and Total carrying costs for different order sizes to arrive at Economic Order Quantity (EOQ) are examined

  • Cash Cycles: Audi

    EOQ and Cash Cycles EOQ: An online source noted that economic order quantity (EOQ) is computed using the formula: EOQ = √ (2ACp / Ch) Where A = demand for the year Cp = cost to place a single order Ch = cost to hold one unit of inventory

  • Inventory Management: Safety Stock, Re-Order, EOQ

    This is an inventory management problem. It is very likely that you are being asked to solve the EOQ (Economic Order Quantity) and other variables related to that.

View More Related Solutions