What is the optimal order quantity for paperclips at their Bethesda store? (b) Assuming 50 weeks in a year, how many times a year should the paperclips be ordered
Clips, a competitor of Staples, is a national chain that provides office supplies to small businesses. Maya, who is the store manager at the Bethesda store, is also responsible for the store’s replenishment functions. Maya is interested in establishing a standard replenishment policy for some of her steady, non-seasonal products of which paperclips is one. Paperclips sell in small boxes that contain two hundred units. Maya estimates that Clips Bethesda sells 100 boxes of paperclips in a typical week and that the purchase price for Clips per box of paperclips is $2.00. The fixed ordering cost any time an order is placed is $20. Maya also estimates a nominal holding cost of $0.10 per box per week.
(a) What is the optimal order quantity for paperclips at their Bethesda store?
(b) Assuming 50 weeks in a year, how many times a year should the paperclips be ordered?
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