What will be the average inventory of fuel

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Reference no: EM131035900

Jack owns a local trucking company. With fuel costs being expensive, Jack wants to evaluate how much fuel, on average, he should store in his 9,000 gallon fuel tank. Each year Jack uses 90,000 gallons of diesel (usage is spread evenly throughout the year). Jack knows with certainly that he can have a load of fuel delivered in 5 days. The price of fuel is $3.09 per gallon and there is a separate $120 ordering fee per order. Jack thinks his holding cost per unit is 30%. If Jack orders at EOQ, what will be the average inventory of fuel in his 9,000 gallon tank?

A. ≈1,206 gallons

B. ≈2,578 gallons

C. ≈2,413 gallons

D. ≈2,290 gallons

Reference no: EM131035900

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