The Metropolitan Bus Company (MBC) purchases diesel fuel from American Petroleum Supply. In addition to the fuel cost,American Petroleum Supply charges MBC $150 per order to cover the expenses of delivering and transferring the fuel toMBC's storage tanks. The lead time for a new shipment from American Petroleum is 10 days; the cost of holding a gallon offuel in the storage tanks is $0.02 per month, or $0.24 per year; and annual fuel usage is 180,000 gallons. MBC busesoperate 288 days a year.(a) What is the optimal order quantity for MBC?(b) How frequently should MBC order to replenish The gasoline supply?-Select- per ---Select--(c) The MBC storage tanks have a capacity of 17,500 gallons. Should MBC consider expanding the capacity of its storagetanks?The maximum inventory is(d) What is the reorder point (in gallons)?gallonsNeed Help?Read itIddebat inMBC-Select--✓to expand its storage tanks.

Economic Order Quantity(EOQ) is the optimal ordering unit based on the consideration of ordering and…

Answered: The Metropolitan Bus Company (MBC)…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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1. Padilla Electronics stocks and sells a particular brand of microcomputer. It costs the firm $450 each time it places an order with the manufacturer for the microcomputers. The cost of carrying one microcomputer in inventory for a year is $170. The store manager estimates that total annual demand for the computers will be 1,200 units, with a constant demand rate throughout the year. Orders are received within the minutes after placement from a local warehouse maintained by the manufacturer. The store policy is never to have stock outs of the microcomputers. The store is open for business everyday of the rear except Christmas day. In reference to problem no. 1, determine the number of orders per year
Operations Management
A shoe manufacturer uses 2,000 rubber soles per year for its popular shoe line. The firm makes its own soles, which it can produce at a rate of 90 per day. The shoes are assembled uniformly over the entire year. Carrying cost is $4 per sole a year. Setup cost for a production run of soles is $20. The firm operates 200 days per year. Determine cycle time for the optimal run size. Group of answer choices: A. 5 days B. 10 days C. 15 Days D. 20 days
KLG is a textile manufacturer in Shanghai. They want to expand their t-shirt business into the United States. They have dedicated a factory in KLG to making the tshirts, and the production rate at that facility is 250 pallets of t-shirts per day. KLG's factory uses a just-in time production model so they store no safety stock at their manufacturing facility in Shanghai, The cost of space at the Shanghai facility is $30 per pallet per year. Each pallet has a value of $2000. KLG is opening a distribution center in Los Angeles from which they will serve the American demand for 250 pallets of t-shirts per day. They keep a safety stock of 1200 pallets of t-shirts at the distribution center. The cost of space at the LA facility is $40 per pallet per year. Each pallet has a value of $2200. KLG hires you as a logistics consultant to help them decide whether to transport the t-shirts from Shanghai to Los Angeles using sea or air. KLG uses a holding cost rate of 20%. FlyHigh Airline has…
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Dairy company SG is producing milk at a fixed rate of 5,000 gallons/hour. The total customer order over a day is 100,000 gallons of milk. This demand is distributed evenly from 8:00 am to 6:00 pm. If there is no milk available, customers will wait until enough is produced to satisfy your orders. The company starts to produce at 8 am with 25,000 gallons in finished goods inventory. In the end, after that all the demand has been met, the plant continues producing until the stock of products finished is restored to 25,000 gallons. When answering the following questions, please address the trucks / milk as a continuous flow process. Start by drawing a graphic indicating how much milk is in stock and how much milk is “on hold” throughout the day. a) At what time of day will customers have to wait for their orders to be filled? b) At what time will customers stop waiting? c) Suppose the milk is collected in trucks with a capacity of 1,250 gallons each. What is the maximum number of trucks…
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Fuego Limited is a table-glass retailer located in Vancouver. The company purchases glasses from Anderson PLC. The details of the table glasses are as follows: The purchase price per glass – $3,000 Cost of an order - $500 The annual cost of carrying a glass - 2% of the purchase price Monthly Demand - 1,250 Units The company has been offered a discount of 1% on the price of a table glass if the lot size is 3,000 table glasses at a time. Required: i. Calculate the Economic Order Quantity. ii. Calculate the total inventory cost. iii. Draw a graph and discuss the behavior of the total inventory holding cost, total ordering cost, and total cost for the given scenario. iv. Advise whether the quantity discount offer can be accepted (Assume that the inventory carrying cost does not vary according to the discount policy)
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1. Padilla Electronics stocks and sells a particular brand of microcomputer. It costs the firm $450 each time it places an order with the manufacturer for the microcomputers. The cost of carrying one microcomputer in inventory for a year is $170. The store manager estimates that total annual demand for the computers will be 1,200 units, with a constant demand rate throughout the year. Orders are received within the minutes after placement from a local warehouse maintained by the manufacturer. The store policy is never to have stock outs of the microcomputers. The store is open for business everyday of the rear except Christmas day. In reference to problem no. 1, determine the minimum total annual inventory cost
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