The TransCanada Lumber Company and Mill processes 10,000 logs annually, operating 250 days per year. Imme-diately upon receiving an order, the logging company’s supplier begins delivery to the lumber mill at the rate of 60 logs per day. The lumber mill has determined that the or-dering cost is $1600 per order, and the cost of carrying logs in inventory before they are processed is $15 per log on anannual basis. Determine the following:a. The optimal order sizeb. The total inventory cost associated with the optimalorder quantityc. The number of operating days between ordersd. The number of operating days required to receive anorder

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
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The TransCanada Lumber Company and Mill processes

10,000 logs annually, operating 250 days per year. Imme-
diately upon receiving an order, the logging company’s

supplier begins delivery to the lumber mill at the rate of 60

logs per day. The lumber mill has determined that the or-
dering cost is $1600 per order, and the cost of carrying logs

in inventory before they are processed is $15 per log on an
annual basis. Determine the following:
a. The optimal order size
b. The total inventory cost associated with the optimal
order quantity
c. The number of operating days between orders
d. The number of operating days required to receive an
order

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