There are 3 Problems:
Question - 1 :-
What is the optimal order quantity for MBC?
How frequently should MBC order to replenish the gasoline supply?
Number of productions per year =
= 240000 / 20000
Number of productions per year = 12 orders per day
The MBC storage tanks have a capacity of 15,000 gallons. Should MBC consider expending the capacity of its storage tanks?
Given as, optimal order quantity for MBC equals to 15,000 gallons, and its storage tanks capacity is 20,000 gallons (which is the optimal quantity), MBC should consider expanding the capacity of its storage tanks.
What is the reorder point?
We knopw that, r = d * m
r = (240000 / 300) * 10
r = 800 * 10
r = 8,000 gallons.
Question - 2
Here we have to find out the total annual cost.
Here we know the formula, i.e,
By substituting values we get,
Total Annual cost = $ 1658.0265
Total Annual cost = $ 1658.0265
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