How frequently should mbc order to replenish gasoline supply

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Reference no: EM133328318

Problem (Algorithmic)

The Metropolitan Bus Company (MBC) purchases diesel fuel from American Petroleum Supply. In addition to the fuel cost, American Petroleum Supply charges MBC $300 per order to cover the expenses of delivering and transferring the fuel to MBC's storage tanks. The lead time for a new shipment from American Petroleum is 10 days; the cost of holding a gallon of fuel in the storage tanks is $0.03 per month, or $0.36 per year; and annual fuel usage is 240,000 gallons. MBC buses operate 300 days a year.

What is the optimal order quantity for MBC?

Q* = fill in the blank 1

How frequently should MBC order to replenish the gasoline supply?

fill in the blank 2 orders per year

The MBC storage tanks have a capacity of 15,000 gallons. Should MBC consider expending the capacity of its storage tanks?

Metropolitan Bus Companythe capacity of its storage tanks.

needs to expanddoes not need to expandneeds to expand

What is the reorder point?

r = fill in the blank 4 gallons

Reference no: EM133328318

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