Root cream company plans to buy 20000 gallons of milk, Ask an Expert

Management Studies

Root Cream Company plans to buy 20,000 gallons of milk annually. It will buy the milk at $2.45 a gallon, plus $30 charge per delivery. The cost of capital for Root is 10%, The storage cost of the milk at the average inventory level, is 2 cents per gallon per day. However, due to state regulations it cannot store the gallon milk for more than 5 days. Calculate the optimal size of the milk storage tank that it should acquire.

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M92486480

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