**Quick-Copy Duplicating Company Inventory Analysis****Overview:**Quick-Copy Duplicating Company utilizes 110,000 reams of standard-size paper each year across its duplicating centers. The supplier's current rate is $2.00 per ream. Inventory carrying costs amount to 15% of the inventory's value. The cost for placing and receiving a paper order is $41.25. Assuming seamless inventory replenishment, we aim to find the following:**a. Economic Order Quantity (EOQ)**- Determine the optimal order size to minimize total inventory costs.**b. Total Annual Inventory Costs**- Calculate the total expenses related to inventory management following the EOQ policy.**c. Optimal Ordering Frequency**- Identify how often orders should be placed based on EOQ.**d. Cost Analysis and Graph Construction**- Compute and illustrate the ordering, carrying, and total inventory costs for varying order quantities: 2,000; 4,000; 5,000; 5,500; 6,000; 7,000; and 9,000 reams.- Plot these costs on a graph, using a smooth curve to connect data points.- Determine the EOQ from this graphical representation and the corresponding data table.**Graph Explanation:**- The graph should display three curves representing ordering costs, carrying costs, and total inventory costs against order quantities.- The EOQ will correlate to the point where the total cost curve reaches its minimum value, which indicates the most cost-effective order size.

Calculation of Economic Order Quantity (EOQ): Annual requirement of raw material (A) = 110,000 reams…

Quick-Copy Duplicating Company uses 110,000 reams of standard-size paper a year at its various duplicating centers. Its current paper supplier charges $2.00 per ream. Annual inventory carrying costs are 15 percent of inventory value. The costs of placing and receiving an order of paper are $41.25. Assuming that inventory replenishment occurs virtually instantaneously, determine the following: a. The firm's EOQ b. The total annual inventory costs of this policy c. The optimal ordering frequency d. Compute and plot ordering costs, carrying costs, and total inventory costs for order quantities of 2,000, 4,000, 5,000, 5,500, 6,000, 7,000, and 9,000 reams. Connect the points on each function with a smooth curve, and determine the EOQ from the graph (and the table used in constructing the graph).

Quick-Copy Duplicating Company uses 110,000 reams of standard-size paper a year at its various duplicating centers. Its current paper supplier charges $2.00 per ream. Annual inventory carrying costs are 15 percent of inventory value. The costs of placing and receiving an order of paper are $41.25. Assuming that inventory replenishment occurs virtually instantaneously, determine the following: a. The firm's EOQ b. The total annual inventory costs of this policy c. The optimal ordering frequency d. Compute and plot ordering costs, carrying costs, and total inventory costs for order quantities of 2,000, 4,000, 5,000, 5,500, 6,000, 7,000, and 9,000 reams. Connect the points on each function with a smooth curve, and determine the EOQ from the graph (and the table used in constructing the graph).

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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