The ePaint Store stocks paint in its warehouse and sells it online on its Internet Web site. The store stocks several brands of paint; however, its biggest seller is Sharman-Wilson Iron Coat paint. The company wants to determine the optimal order size and total inventory cost for Iron Coat pant given an estimated annual demand of 10,000 gallons of paint, an annual carrying cost of $0.75 per gallon, and an ordering cost of $150 per order. a) What is the optimal order size

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Business

Nickie

5 April, 19:55

The ePaint Store stocks paint in its warehouse and sells it online on its Internet Web site. The store stocks several brands of paint; however, its biggest seller is Sharman-Wilson Iron Coat paint. The company wants to determine the optimal order size and total inventory cost for Iron Coat pant given an estimated annual demand of 10,000 gallons of paint, an annual carrying cost of $0.75 per gallon, and an ordering cost of $150 per order. a) What is the optimal order size

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Answers (1)

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Lilliana · Answer 1

optimal order is 2000 gallons

Explanation:

Given data

annual demand D = 10,000 gallons

annual carrying cost H = $0.75 per gallon

ordering cost S = $150 per order

to find out

What is the optimal order size

solution

we will apply here optimal order size is

optimal order = √ (2DS/H)

put all these value here

optimal order = √ (2DS/H)

optimal order = √ (2 (10000) 150/0.75)

optimal order = √ (3000000/0.75)

optimal order = √ (4000000)

optimal order is 2000 gallons