The small boatyard White Kayaks built 156 epoxy kayaks last year. Each of these requires 12 kg of epoxy, purchased in 6-kg barrels at $170 each, with a freight cost of $18 per shipment plus $1/kg. The annual carrying cost is estimated to 20% of the value.
a) If the purchase policy is to buy 20 barrels each time, how much time can be spent on administrative work if the order quantity is considered optimal? The boat-builder charges $25/hour.
b) If time spent is 30 minutes, what would be the optimal order quantity?