Purchases diesel fuel from american petroleum supply

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Reference no: EM132275564

The NYC AK Company (MBC) purchases diesel fuel from American Petroleum Supply. In addition to fuel cost, American Petroleum Supply charges MBC $250 per order to cover expenses of delivering and transferring the fule 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 $0.04/month, and annual fuel usage is 150,000 gallons. MBC buses operate 300 days a year and running out of fuel is not an option.

a) What is the optimal order quantity for MBC?

b) How frequently (days) should MBC order to replenish the gasoline supply?

c) What is the reorder point?

Reference no: EM132275564

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