Find the optimal size of its milk storage tank

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Fuller Ice Cream Company buys 73,000 gallons of milk annually. Due to state regulations, it cannot store the milk for more than 8 days. Find the optimal size of its milk storage tank. The price of milk is $3 per gallon, and the cost of capital for Fuller is 11%. The ordering cost is $200 per order. The storage cost of milk is $10 a gallon per year, based on maximum inventory. Does your answer comply with state regulations?

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Reference no: EM13767713

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