A microbrewery purchases malt for production. The supplier charges $35 for delivery (no matter how much is delivered) and $1.20 per gallon. The annual holding cost is 35% of the price per gallon. Usage is 250 gallons/week. a) If the order quantity is 1000 gallons, what is the average inventory? b) If the order quantity is 1500 gallons, how many orders are placed each year? c) What is the EOQ quantity?
A microbrewery purchases malt for production. The supplier charges $35 for delivery (no matter how much is delivered) and $1.20 per gallon. The annual holding cost is 35% of the price per gallon. Usage is 250 gallons/week.
a) If the order quantity is 1000 gallons, what is the average inventory?
b) If the order quantity is 1500 gallons, how many orders are placed each year?
c) What is the EOQ quantity?
d) If the order quantity is 2500 gallons, what is the sum of the ordering and holding costs PER GALLON?
e) If orders are for the EOQ amount, what is the annual cost of the inventory system as a percentage of the annual purchase cost?
f)If orders must be in integer multiples of 1000 gallons, how much should be ordered to minimize ordering and holding costs PER GALLON?
g) A 3% purchase price discount is given if orders are for 8000 gallons or more. What would total annual costs (purchasing, ordering, and holding)
be using this discount?
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