Chapter 13, Problem 11P

The Shotz Brewery produces an ale that it stores in barrels in its warehouse and supplies to its distributors on demand. The demand for ale is 1800 barrels per day. The brewery can produce 3000 barrels per day. It costs $7500 to set up a production run for ale. Once it is brewed, the ale is stored in a refrigerated warehouse at an annual cost of $60 per barrel. Determine the economic order quantity and the minimum total annual inventory cost.