An oil refinery buys crude oil on a long-term supply contract for $22.50 per barrel. When shipments of crude oil are made to the refinery, they arrive at the rate of 10,000 barrels per day. The refinery uses the oil at a rate of 5,000 barrels per day and plans to purchase 500,000 barrels of crude oil next year. If the carrying cost is 25percent of acquisition cost per unit per year and the ordering cost is $7,500 per order: a. What is the EOQ for the crude oil? b. What is the TSC at EOQ? c. How many days of production are supported by each order of crude oil?
Critical Path Method
The critical path is the longest succession of tasks that has to be successfully completed to conclude a project entirely. The tasks involved in the sequence are called critical activities, as any task getting delayed will result in the whole project getting delayed. To determine the time duration of a project, the critical path has to be identified. The critical path method or CPM is used by project managers to evaluate the least amount of time required to finish each task with the least amount of delay.
Cost Analysis
The entire idea of cost of production or definition of production cost is applied corresponding or we can say that it is related to investment or money cost. Money cost or investment refers to any money expenditure which the firm or supplier or producer undertakes in purchasing or hiring factor of production or factor services.
Inventory Management
Inventory management is the process or system of handling all the goods that an organization owns. In simpler terms, inventory management deals with how a company orders, stores, and uses its goods.
Project Management
Project Management is all about management and optimum utilization of the resources in the best possible manner to develop the software as per the requirement of the client. Here the Project refers to the development of software to meet the end objective of the client by providing the required product or service within a specified Period of time and ensuring high quality. This can be done by managing all the available resources. In short, it can be defined as an application of knowledge, skills, tools, and techniques to meet the objective of the Project. It is the duty of a Project Manager to achieve the objective of the Project as per the specifications given by the client.
An oil refinery buys crude oil on a long-term supply contract for $22.50 per barrel.
When shipments of crude oil are made to the refinery, they arrive at the rate of
10,000 barrels per day. The refinery uses the oil at a rate of 5,000 barrels per day
and plans to purchase 500,000 barrels of crude oil next year. If the carrying cost is
25percent of acquisition cost per unit per year and the ordering cost is $7,500 per
order:
a. What is the EOQ for the crude oil?
b. What is the TSC at EOQ?
c. How many days of production are supported by each order of crude oil?
d. How much storage capacity is needed for the crude oil?
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