What is the annual cost of the inventory system

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Reference no: EM13947855

Rusk Corporation sells 185,000 gallons of paint annually at several retail outlets. The ordering cost per order is $75, and its cost of capital is 10%. The storage and handling cost for paint is $2 per year, based on average inventory. Rusk buys the paint from the manufacturer according to the following price schedule: 1 - 999 gallons at $11 per gallon, 1000 - 9999 gallons at $10 per gallon, and 10,000 gallons and over at $9 per gallon.

(A) Find the optimal order quantity for Rusk. 10,000 gallons

(B) For this optimal order size, what is the total annual cost of paint? $1,680,888

Reference no: EM13947855

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