Metropolitan Bus Company purchases diesel fuel from American Petroleum Supply. American Petroleum Supply charges $250.00 to cover delivery expenses. The lead time for a new shipment from American Petroleum is 10 days and the cost of holding a gallon of fuel in storage is $0.04 per month or $0.48 per year and annual fuel usage is 150,000 gallons. MBC operates 300 days a year. What is the optimal order quantity for MBC? How frequently should MBC order to replenish the gasoline supply? The MBC storage tanks have a capacity of 150,00 gallons. Should MBC consider expanding the capacity of its storage tanks? What is the reorder point?
3 answers
Metropolitan Bus Company purchases diesel fuel from American Petroleum Supply. American Petroleum Supply charges $250.00 to cover delivery expenses. The lead time for a new shipment from American Petroleum is 10 days and the cost of holding a gallon of fuel in storage is $0.04 per month or $0.48 per year and annual fuel usage is 150,000 gallons. MBC operates 300 days a year. What is the optimal order quantity for MBC?
EOQ= sqrt (2*150000*250)/.48
EOQ= 12500
EOQ= 12500
wow thank you