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Micky5490! Micky5490!
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6 years ago
Central University uses 123,000 of a particular toner cartridge for laser printers in the student computer labs each year.
 
  The purchasing director of the university estimates the ordering cost at 45 and thinks that the university can hold this type of inventory at an annual storage cost of 22 of the purchase price. How many months' supply should the purchasing director order at one time to minimize the total annual cost of purchasing and carrying?
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#1
6 years ago
First, calculate the EOQ from the data provided. In this problem, the units are dollars, and the price of each is 1.

Q = = 7093.53
One month's usage is 123000/12 = 10,250. EOQ = 7094. Month's usage = 7094/10250 = 0.69, or about three week's usage. (This is supported by the order frequency of 17 per year).
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