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.

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

(C) What is the annual cost of the inventory system?

Answer rating: 100% (QA)

A Optimal Order quantity 2 D CoCh 2 185 000 75 2 27 750 0002 13 875 000 37249161064 3 725 gallons ... View the full answer