The Metropolitan Bus Company (MBC) purchases diesel fuel from American Petroleum Supply. In addition to the fuel cost, American Petroleum Supply charges MBC $200 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 $0.01 per month, or $0.12 per year; and annual fuel usage is 120,000 gallons. MBC buses operate 300 days a year. What is the optimal order quantity for MBC? Q* = fill in the blank 1 How frequently should MBC order to replenish the gasoline supply? fill in the blank 2 orders per year The MBC storage tanks have a capacity of 15,000 gallons. Should MBC consider expending the capacity of its storage tanks? Metropolitan Bus Company __needs to expand or does not need to expand___ the capacity of its storage tanks. What is the reorder point? r = fill in the blank 4 gallons

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Answered: The Metropolitan Bus Company (MBC)…

Advanced Engineering Mathematics

10th Edition

ISBN:9780470458365

Author:Erwin Kreyszig

Publisher:Erwin Kreyszig

Chapter2: Second-order Linear Odes

Section: Chapter Questions

Problem 1RQ

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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 $200 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 $0.01 per month, or $0.12 per year; and annual fuel usage is 120,000 gallons. MBC buses operate 300 days a year.

What is the optimal order quantity for MBC?

Q* = fill in the blank 1
How frequently should MBC order to replenish the gasoline supply?

fill in the blank 2 orders per year
The MBC storage tanks have a capacity of 15,000 gallons. Should MBC consider expending the capacity of its storage tanks?

Metropolitan Bus Company __needs to expand or does not need to expand___ the capacity of its storage tanks.
What is the reorder point?

r = fill in the blank 4 gallons

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