Question

Yellow​ Press, Inc., buys paper in​ 1500 pound rolls for printing. Annual demand is 2750 rolls.

The cost per roll is $1000, and the annual holding cost is 28 percent of the cost. Each order costs $55.

a. How many rolls should Yellow Press order at a​ time?

Yellow Press should order____rolls at a time. ​(Enter your response rounded to the nearest whole​ number.)

b.What is the time between orders? (Assumer 200 workdays per year.)

The time between the order is ____ days (enter your response rounded to the one decimal place

​

Answer 1

(a): The formula will be: No. of rolls to be ordered at a time = (2*annual demand*cost per order/holding cost)^0.5

= (2*2750*55/28% of 1000)^0.5

= 32.87

The rounded off answer will be: Yellow Press should order 33 rolls at a time.

(b): Expected no. of orders = 2750 rolls/33 rolls per order = 83.33 orders

Thus time between orders = 200 workdays per year/83.33 orders per year

= 2.4 days

Thus the time between the order is 2.4 days.