Compute the following Economic Order guantity (EO9) Problem (20 Points) A/ The N

Question

Compute the following Economic Order guantity (EO9) Problem (20 Points) A/ The Nissan Corporation uses approximately 150,000 gallons of black paint and 100.000 gallons of red paint per fiscal year. Additional information indicates the Corporation spends $25 per order and holding costs estimated at $5 per gallon. What would be the optimal quantity to order? B/ What is the total gallons of paint (black/red) was reduced to 100.000, and the cost to be ordered reduced to $20, What would be the optimal quantity to order? C/ Refer to A, with 250,000 gallons of paint being used per year, how many gallons of paint were used per day? D/ Based on the EOg in Problem A, what would be the approximate number of days (new gallons of paint)?

Explanation / Answer

A

Quantity used =

Black paint ----- 150,000 gallons

Red paint ------- 100,000 gallons

Holding cost $5 per gallon

Variable cost $25 per order

Optimal Quantity : [2 * (Annual Usage in Units * Setup Cost) / Annual Carrying Cost per Unit]^(1/2)

= [2 * 250000 * 5/30]^(1/2) = 288.7

B

Black paint ----- 150,000 gallons

Red paint ------- 100,000 gallons

Holding cost $5 per gallon

Variable cost $20 per order

= [2 * 200000 * 5/20]^(1/2) = 316.23

C

250,000 gallons of paint used per year

Gallons of paint used per day = 250,000/356 is around 700 gallons.

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.