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 to MBC's storage tanks. The lead time for a new shipment from American Petroleum is 10 days; the cost of holding a gallon of fuel in the storage tanks is $0.02 per month, or $0.24 per year; and annual fuel usage is 180,000 gallons. MBC buses operate 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 storage tanks? The maximum inventory is (d) What is the reorder point (in gallons)? MBC-Select-- to expand its storage tanks.

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
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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 to
MBC's storage tanks. The lead time for a new shipment from American Petroleum is 10 days; the cost of holding a gallon of
fuel in the storage tanks is $0.02 per month, or $0.24 per year; and annual fuel usage is 180,000 gallons. MBC buses
operate 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 storage
tanks?
The maximum inventory is
(d) What is the reorder point (in gallons)?
gallons
Need Help?
Read it
Iddebat in
MBC-Select--
✓to expand its storage tanks.
Transcribed Image Text: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 to MBC's storage tanks. The lead time for a new shipment from American Petroleum is 10 days; the cost of holding a gallon of fuel in the storage tanks is $0.02 per month, or $0.24 per year; and annual fuel usage is 180,000 gallons. MBC buses operate 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 storage tanks? The maximum inventory is (d) What is the reorder point (in gallons)? gallons Need Help? Read it Iddebat in MBC-Select-- ✓to expand its storage tanks.
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