Dazzle Graphics uses a special purpose paper on 80% of its jobs. The paper is purchased in 100-sheet packages at a cost of $100 per package. Management estimates that the cost of placing and receiving a typical order is $15, and the annual cost of carrying a package in inventory is $1.50. Dazzle uses 2,600 packages each year. Production is constant, and the lead time to receive an order is 1 week. (Assume 52 weeks in a year.)The reorder point is:
A. 100 packages.
B. 203 packages.
C. 25 packages.
D. 225 packages.
E. 50 packages.
Answer: E
Business
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