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Torrance Refinery produces approximately 21.1 Million barrels of gasoline per year. A California distributor sources its gasoline from the Torrance refinery. The annual demand for gasoline at the California distributor is 8.2 Million barrels. The cost of storing gasoline is approximately $30 per barrel (per year). The cost of placing an order to the Torrance refinery (including shipping) is $5400 per order. Orders will be received gradually instead of delivered all at once (hence EPQ).
At what quantity will the total cost of procurement be the lowest?
How many days does each production run last at the Torrance Refinery to serve the California distributor?
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