12. Economic Order Quantity. A large consulting firm orders photocopying paper by the carton.
The firm pays a $30 delivery charge on each order. The total cost of storing the paper, including forgone interest, storage space, and deterioration, comes to about $1.50 per carton per month. The firm uses about 1,000 cartons of paper per month.
a. Fill in the following table:
Order Size
100 200 250 500
Orders per month ________ ________ ________ ________
Total order cost ________ ________ ________ ________
Average inventory ________ ________ ________ ________
Total carrying costs ________ ________ ________ ________
Total inventory costs ________ ________ ________ ________
b. Calculate the economic order quantity. Is your answer consistent with your findings in
part (a)?