Answer:
The answer is "162,000"
Explanation:
Annual Request of paper annually D = $ 1 215,000
Cost per order S = $ 1200
Cost of keeping H = $.09 a year
quantity of the economic order (EQ) = [tex]\sqrt{ \frac{(2\times D \times S)}{H}}[/tex]
[tex]=\sqrt{ \frac{(2\times 1,215,000 \times 1,200)}{0.09}}\\\\= \frac{54000}{0.3}\\\\=180,000[/tex]
Minimum total annual cost = [tex]\frac{D \times S }{(EQ)} + H \times \frac{(EQ)}{2}[/tex]
[tex]= \frac{1,215,000 \times 1200}{ 180,000} + \frac{ 0.09 \times 180,000}{ 2}\\\\= \frac{1,215,00 \times 12}{ 18} + 0.09 \times 90,000\\\\= \frac{1,458,000}{ 18} + 0.09 \times 90,000\\\\=81,000 + 81,000\\\\=162,000[/tex]
