Optimizing Newspaper Orders for Thabo at OR Tambo Airport

How many copies of the Business Day should Thabo order each day?

Calculating the Optimal Daily Order Quantity

To determine the optimal number of copies of the Business Day that Thabo should order each day, we can use the economic order quantity (EOQ) formula which takes into account the average daily demand, the cost per unit, and the holding cost.

Thabo, a vendor at OR Tambo Airport, needs to optimize his newspaper orders to minimize costs and avoid stockouts or excessive unsold papers. The optimal daily order quantity for the Business Day can be calculated through the EOQ formula:

EOQ = √((2 * annual demand * ordering cost) / holding cost)

In this case, we adjust the formula to determine the daily order quantity:

Daily EOQ = √((2 * daily demand * ordering cost) / holding cost)

Given that Thabo sells an average of 110 copies of the Business Day per day and the ordering cost is R5.50 per unsold paper, and the holding cost is R10 per paper, we can now calculate:

Daily EOQ = √((2 * 110 * 5.50) / 10)

After the calculation, the optimal daily order quantity of the Business Day for Thabo is approximately 29 copies. Therefore, Thabo should order around 29 copies of the Business Day each day to minimize costs and maximize profitability.