EXERCISE Production Quantity Model Assume that the ePaint Store has its own manufacturing facility in which it produces troncoat paint. The ordering Cost Co is the cost of setting up the production process to make paint. Co = $150. Recall that Cc= $0.75 per gallon and D -10,000 gallons per year. The manufacturing facility operates the same days the store is open fi.e. 311 days) and produces 150 gallons of paint per day. Determine the optimal order size and the total inventory cost PRODUCTION QUANTITY MODEL (POM) Optimal Quantity = 2 COD Vcc [1 -(d/p) Total Annual Inventory Cost TC COD a + Cc Q. (1-(d/p) 2 Where: Co-Ordering cost D demand p=production rate Cc Carrying cost d-cally rate at which inventory is demanded