1. Using a computerized Inventory Management System, a Paint Supply Store franchise continuously monitors the inventory of all the paint located at each of their 15 stores and their distribution warehouse. The Paint Supply Store franchise sells an average of 52 gallons of Yellow Paint every week (for 52 weeks per year). They purchase Yellow Paint from their supplier at a price of $3.00 per gallon. [The company does not hold Safety Stock]. It takes 1.75 weeks to receive an order from the supplier.
Administrative costs for Ordering paint have been estimated to be $25 per order.
Holding Costs = 30% of the purchase price per gallon per year.
At what inventory level should the company place an order?
A. 2366 gallons of paint.
B. 54 gallons of paint.
C. 4732 gallons of paint.
D. 26 gallons of paint.
E. 91 gallons of paint.
2. Using a computerized Inventory Management System, a Paint Supply Store franchise continuously monitors the inventory of all the paint located at each of their 15 stores and their distribution warehouse. The Paint Supply Store franchise sells an average of 42 gallons of Orange Paint every week (for 52 weeks per year). They purchase Orange Paint from their supplier at a price of $2.50 per gallon. [The company does not hold Safety Stock].
It takes 1.50 weeks to receive an order from the supplier.
Administrative costs for Ordering paint have been estimated to be $20 per order.
Holding Costs = 25% of the purchase price per gallon per year.
What is the most Economic Order Quantity?
A. 591 gallons of paint.
B. 132 gallons of paint.
C. 52 gallons of paint.
D. 473 gallons of paint.
E. 374 gallons of paint.
3. Using a computerized Inventory Management System, a Paint Supply Store franchise continuously monitors the inventory of all the paint located at each of their 15 stores and their distribution warehouse. The Paint Supply Store franchise sells an average of 40 gallons of Orange Paint every week (for 52 weeks per year). Their current policy is that when they place an order for Orange Paint from their supplier, they order 75 gallons at a price of $2.50 per gallon. [The company does not hold Safety Stock].
It takes 1.50 weeks to receive an order from the supplier. Administrative costs for Ordering paint have been estimated to be $20 per order. Holding Costs = 25% of the purchase price per gallon per year. What is the Total Annual Inventory Cost for the company's current policy?
A. $824.50.
B. $2106.00.
C. $848.50.
D. $175.90.
E. $639.63.