a. Suppose Joe orders 1,000 gallons each time. What is his average inventory (in gal)? (Round your answer to 2 decimal places.) Suppose Joe orders 1,500 gallons each time. How many orders does he place with his supplier each year? How many gallons should Joe order from his supplier with each order to minimize the sum of the ordering and holding costs? gallons orders gallons

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
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Chapter2: Introduction To Spreadsheet Modeling
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Joe Birra needs to purchase malt for his microbrewery production. His supplier charges $35 per delivery (no matter how much is
delivered) and $1.20 per gallon. Joe's annual holding cost per unit is 35 percent of the price per gallon. Joe uses 250 gallons of malt
per week.
a.
Suppose Joe orders 1,000 gallons each time. What is his average inventory (in
gal)?
(Round your answer to 2 decimal places.)
Suppose Joe orders 1,500 gallons each time. How many orders does he place with
his supplier each year?
How many gallons should Joe order from his supplier with each order to minimize
the sum of the ordering and holding costs?
(Round your answer to 3 decimal places.)
Suppose Joe orders 2,500 gallons each time he places an order with the supplier.
What is the sum of the ordering and holding costs per gallon?
(Round your answer to 2 decimal places.)
e.
Suppose Joe orders the quantity from part (c) that minimizes the sum of the
ordering and holding costs each time he places an order with the supplier. What is
the annual cost of the EOQ expressed as a percentage of the annual purchase
cost?
f.
If Joe's supplier only accepts orders that are an integer multiple of 1,000 gallons,
how much should Joe order to minimize ordering and holding costs per gallon?
Joe's supplier offers a 3 percent discount if Joe is willing to purchase 8,000 gallons
g. or more. What would Joe's total annual cost (purchasing, ordering, and holding) be
if he were to take advantage of the discount?
gallons
orders
gallons
per gallon
%
gallons
Transcribed Image Text:Joe Birra needs to purchase malt for his microbrewery production. His supplier charges $35 per delivery (no matter how much is delivered) and $1.20 per gallon. Joe's annual holding cost per unit is 35 percent of the price per gallon. Joe uses 250 gallons of malt per week. a. Suppose Joe orders 1,000 gallons each time. What is his average inventory (in gal)? (Round your answer to 2 decimal places.) Suppose Joe orders 1,500 gallons each time. How many orders does he place with his supplier each year? How many gallons should Joe order from his supplier with each order to minimize the sum of the ordering and holding costs? (Round your answer to 3 decimal places.) Suppose Joe orders 2,500 gallons each time he places an order with the supplier. What is the sum of the ordering and holding costs per gallon? (Round your answer to 2 decimal places.) e. Suppose Joe orders the quantity from part (c) that minimizes the sum of the ordering and holding costs each time he places an order with the supplier. What is the annual cost of the EOQ expressed as a percentage of the annual purchase cost? f. If Joe's supplier only accepts orders that are an integer multiple of 1,000 gallons, how much should Joe order to minimize ordering and holding costs per gallon? Joe's supplier offers a 3 percent discount if Joe is willing to purchase 8,000 gallons g. or more. What would Joe's total annual cost (purchasing, ordering, and holding) be if he were to take advantage of the discount? gallons orders gallons per gallon % gallons
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