Word Problem EOQ Wilson Model Math Problem

[Oscar Wright]

The General Chemical Company uses 150,000 gallons of hydrochloric acid per month. The cost of carrying the chemical in inventory is 50 cents per gallon per year, and the cost of ordering the chemical is $150 per order. The firm uses the chemical at a constant rate throughout the year. The chemical's economic order quantity is ??????

Pls. help - pulling my hair out on this one!

Thanks

Oscar

 

[tkhunny]

What have you tried?

1) In is unacceptable to run out of acid.
2) Reduce orders as much as possible.
3) Reduce storage as much as possible.

Obviously,
1) You cannot have zero (0) orders, so the cost of ordering cannot be zero ($).
2) You cannot order consinuously (very expensive), so the cost of storage cannot be zero ($0).
3) The units are a mess. Usage is monthly. Storage is annually. Ordering is arbitrary. Usage is continuous. You have to pick something consistent.