Question

Your family's house painting business has decided to try this "EOQ thing" you just learned in SCMS 3510. So you open the financials and note the following information: Three-year average paint consumption: 3265 gallons per year. You use a small warehouse to hold your equipment and paint. From your cost accounting class, you estimate that your holding cost per gallon of paint is $1.95 per year. Buying the materials needed requires more time than you thought. The part-time person whose only function is to do all of your buying says that she processes 1000 purchase orders per year and her average pay has been $15600 per year. What is the EOQ for paint in gallons? (Your answer should be in whole gallons)

Answer 1