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Joe Birra needs to purchase malt for his micro-brew production. His supplier charges $30 per delivery ( no matter how much is delivered) and $1.05 per gallon. Joe's annual holding cost is 25% of the price per gallon. Joe uses 225 gallons of malt per week.

a) suppose Joe orders 750 gallons each time. What is his average inventory.

b) suppose joe orders 1500 gallons each time. How many order does he place with his supplier each year?

c) how many gallons should Joe order from his supplier with each order to minimize the sume of ordering and holding costs?

d) suppose Joe orders 2250 gallons each time he places an order with the supplier. What is the sum of ordering and holding costs per gallon?

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M92589550

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