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The Chemco Company uses a highly toxic chemical in one of its manufacturing processes. It must have the product delivered by a special cargo trucks designed for safe shipment of chemicals. As such, ordering (and delivery) costs are relatively high, at $3600 per order. The chemical product is packaged in 1 litre plastic containers. The cost of holding the chemical in storage is $50 per litre per year. The annual demand for the chemical, which is constant over time is 7000 litres per year. The lead-time from the time of order placement until receipt is 10 days. The company operates 310 working days per year. Computer the (A) optimal order quantity, (B) total minimum inventory cost, and the (C) reorder point. Show your work.

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M92589291

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