The Metropolitan Bus Company (MBC) purchases diesel fuel from American Petroleum Supply. In addition to the fuel cost, American Petroleum Supply charges MBC $225 per order to cover theexpenses 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 tanksis $0.03 per month, or $0.36 per year; and annual fuel usage is 180,000 gallons. MBC buses operate 300 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 isMBC ---Select--- ✓to expand its storage tanks.(d) What is the reorder point (in gallons)?gallons

Economic Order Quantity (EOQ) is an inventory managing technique that helps to identify the optimal…

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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Evaluate the ethical dilemmas in inventory optimization, particularly concerning product shelf life, waste reduction, and environmental impact.
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Costco also employs a just-in-time inventory management system, which includes sharing data directly with many of its largest suppliers. Companies like Kimberly-Clark calculate re-order points in real time and send new inventory, as needed, to replenish store shelves. Costco also works to redesign product packaging to squeeze more bulky goods onto trucks and shelves, reducing the number of orders Costco needs to place with suppliers.Occasionally, the company leverages its 75 million square feet of warehouse space to reduce purchasing costs. For example, when Procter & Gamble recently announced a 6% price increase for its paper goods, Costco bought 258 truckloads of paper towels at the old rate and stored them using available capacity in its distribution centers and warehouses.These inventory management techniques have allowed Costco to succeed in tough times while others have failed. Costco turns its inventory nearly 12 times a year, far more often than other retailers. With many…
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A supplier ships goods from Richmond, VA to three market places in 3 cities (Chicago, IL; Athens, GA; St. Luis, MO). The supplier can ship every day, every other day, or every third day. There is a penalty of $0.30/cwt for each day delayed. Consolidating shipments allows for lower transportation costs from larger loads, but incurs penalty costs due to the delay. Transportation Rate (S/cwt) Shipment City Weight/day LTL 50,000 lb 50000 lb Chicago, IL 18,000 lb (180 cwt) 1.50 1.25 Athens, GA 15,000 lb (150 cwt) 1.35 1.00 St. Luis, MO 12,000 lb (120 cwt) 2.00 1.50 Total 45,000 Ib = 450 cwt Find what is the cost for the following: Shipping Every Day Shipping on the alternate Day (every two days) Shipping every three Day
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Transit time is critical in supply chain management because its impact on the inventory availability, stockout cost, and customer satisfaction. Transit time is the total elapsed time that it takes to move goods from the point of origin to the destination. “Transit time include the time required for pickup activities, terminal handling, linehaul movement and customer deliver”. Do you agree with this statement? Discuss.

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