Bruno fruscalzo decided to start small production facility

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Reference no: EM132254949

Bruno Fruscalzo decided to start a small production facility in Sydney to sell gelato to the local restaurants. His local milk supplier charges $0.50 per kg of milk plus a $20 delivery fee (the $20 fee is independent of the amount ordred). Bruno's holding cost is $0.03 per kg per month. He needs 9000 kg of milk per month.

Bruno's supplier's trick can carry 20,000 kg of milk. The supplier does not want to deliver more tahn three customers wit heach truck. Thus, the supplier requires a minimum order quantity of 6500 kg. If Bruno orders the minimum amount, what would be the sum of his annual ordering and holding costs? Asume he has a storage vessel large enough to hold 6500 kg.

Bruno's supplier offers a 5 percent discount when a customer orders a full truck, which is 20,000 kg. Assume Bruno can store that quantity and the product will not spoil. If Bruno orders a full truck, what would be the inventory holding and ordering cost incurred per kg of milk?

Reference no: EM132254949

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