What quantity of coal should they order each time

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A power plant uses coal to generate electricity. Coal is supplied at a rate of 9,000 tons per day at price of $16.50 per ton and is used at rate of 1400 tons per day. The plant operates 365 days per year and its annual carrying cost is 28% of acquisition cost. Ordering cost is $675 per order.

1. What quantity of coal should they order each time?

2. What is maximum inventory level during the year?

Reference no: EM13844632

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