Question
Fred operates a CollegePro home painting franchise. One of the products most used by its employees is the white paint used to make the first
Fred operates a CollegePro home painting franchise. One of the products most used by its employees is the white paint used to make the first coat on gypsum walls. Fred uses 2,800 containers of this type of paint annually and it can be considered that it is used constantly. The purchase cost per container is $24 and the storage cost is estimated at $4 per unit per year. Each time an order is placed, it takes four hours of work for an employee to prepare and pick up the order. The hourly cost of this employee is $30.
11- Fred was advised to determine the quantity to order based on the QC model (economic quantity to order). However, she is hesitant to use this model. She argues that the parameters (costs and demand) are estimates rather than exact values. Do you recommend Fred to use this model? Justify your answer. 12-Whatever your recommendation to the previous question, Frdrique decides to use the QC. Determine how many cans of white paint she should order based on this pattern. 13-Calculate the average stock associated with this replenishment plan. 14-Determine the number of orders per year that will have to be made by Frdrique. 15-Calculate the total inventory costs associated with this product. 16-During a discussion with his supplier, the latter indicates that he can only supply the product in batches of 40 units. How much should Fred order then?
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