Question

Yellow​ Press, Inc., buys paper in​ 1,500-pound rolls for printing. Annual demand is 3 comma 000 3,000 rolls. The cost per roll is ​$ 875 875​, and the annual holding cost is 20 20 percent of the cost. Each order costs ​$ 75 75. a. How many rolls should Yellow Press order at a​ time?

Answer 1

Answer:

59 orders

Explanation:

For computing the how many rolls should order at a time, first we have to determine the economic order quantity which is shown below:

The computation of the economic order quantity is shown below:

= $\sqrt{\frac{2\times \text{Annual demand}\times \text{Ordering cost}}{\text{Carrying cost}}}$

where,

Carrying cost = $875 × 20% = $175

And, other items values would remain the same

ow put these values to the above formula

So, the value would be equal to

= $\sqrt{\frac{2\times \text{3,000}\times \text{\ 75}}{\text{\ 175}}}$

= 50.71 units

Now The number of orders would be equal to

= Annual demand ÷ economic order quantity

= $3,000 ÷ 50.71 units

= 59 orders