Problem: The Ace Paint Store stocks paint in its warehouse. Its vibrant yellow paint is very popular and its Annual Carrying Cost is $0.75 per gallon, placing an order for it costs $150.00 and you have forecasted an annual demand of 10,000 gallons.
Your manager has asked you the following questions: (Please indicate the answers for each one after calculating them on your scratch paper using the EOQ Model)
a) What is the optimal ordering size -EOQ - for this paint? (How many gallons in each order?)
b) What is the annual inventory cost for this color paint?
c) How many orders should we place in one year for this paint