Conclude whether the store management should continue

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Reference no: EM1377839

Q. A store (open 24 hours a day, every day) sells 8-roll packs of paper towels, at the rate of approximately 420 packs per week. Because the towels are so bulky, the annual cost to carry them in inventory is estimated at $.50 per 8-roll pack. The cost to place an order is $20. It takes four days for an order to arrive. Currently, Super D has a policy of ordering once each month also for quantities of 1000 packs.

a. Find out the optimal order quantity

b. Illustrate what is the optimal total ordering cost per year vs. illustrate what is which cost with the current policy?

c. Explain how would you Conclude whether the Store management should continue with this policy or not?

Reference no: EM1377839

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