Introduction to Management Science 12th Edition by Bernard Taylor

Exercise 12

The Metropolitan Book Company purchases paper from the Atlantic Paper Company. Metropolitan produces magazines and paperbacks that require 1,215,000 pounds of paper per year. The cost per order for the company is $1,200; the cost of holding 1 pound of paper in inventory is $0.08 per year. Determine the following:
a. The economic order quantity
b. The minimum total annual cost
c. The optimal number of orders per year
d. The optimal time between orders