Question #1 The Metropolitan Bus Company (MBC) purchases diesel fuel from Americ
ID: 336858 • Letter: Q
Question
Question #1
The Metropolitan Bus Company (MBC) purchases diesel fuel from American Petroleum Supply. In addition to the fuel cost, American Petroleum Supply charges MBC $228 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 9 days; the cost of holding a gallon of fuel in the storage tanks is $0.05 per month, or $0.6 per year; and annual fuel usage is 171000 gallons. MBC buses operate 300 days a year.
What is the optimal order quantity for MBC?
Q* =
How frequently should MBC order to replenish the gasoline supply? If required, round your answer to two decimal place.
order(s) per month
The MBC storage tanks have a capacity of 15,000 gallons. Should MBC consider expanding the capacity of its storage tanks?
What is the reorder point?
r = gallons
Question #2
The reorder point r = dm is defined as the lead-time demand for an item. In cases of long lead times, the lead-time demand and thus the reorder point may exceed the economic order quantity Q*. In such cases, the inventory position will not equal the inventory on hand when an order is placed, and the reorder point may be expressed in terms of either the inventory position or the inventory on hand. Consider the economic order quantity model with D=4000, Co =$31, Ch =$4, and 250 working days per year. Identify the reorder point in terms of the inventory position and in terms of the inventory on hand for each of the following lead times. When required, round your answers to the nearest whole number.
Question #3
Suppose that the R&B Beverage Company has a soft drink product that shows a constant annual demand rate of 3250 cases. A case of the soft drink costs R&B $4. Ordering costs are $24 per order and holding costs are 21% of the value of the inventory. R&B has 250 working days per year, and the lead time is 5 days. Identify the following aspects of the inventory policy:
Economic order quantity. If required, round your answer to two decimal places.
Q* =
Reorder point.
r =
Cycle time. If required, round your answer to two decimal places.
T = days
Total annual cost. If required, round your answer to two decimal places.
TC = $
Explanation / Answer
Question #1
The Metropolitan Bus Company (MBC) purchases diesel fuel from American Petroleum Supply. In addition to the fuel cost, American Petroleum Supply charges MBC $228 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 9 days; the cost of holding a gallon of fuel in the storage tanks is $0.05 per month, or $0.6 per year; and annual fuel usage is 171000 gallons. MBC buses operate 300 days a year.
What is the optimal order quantity for MBC?
Q* =
How frequently should MBC order to replenish the gasoline supply? If required, round your answer to two decimal place.
order(s) per month
The MBC storage tanks have a capacity of 15,000 gallons. Should MBC consider expanding the capacity of its storage tanks?
What is the reorder point?
r = gallons
Question #2
The reorder point r = dm is defined as the lead-time demand for an item. In cases of long lead times, the lead-time demand and thus the reorder point may exceed the economic order quantity Q*. In such cases, the inventory position will not equal the inventory on hand when an order is placed, and the reorder point may be expressed in terms of either the inventory position or the inventory on hand. Consider the economic order quantity model with D=4000, Co =$31, Ch =$4, and 250 working days per year. Identify the reorder point in terms of the inventory position and in terms of the inventory on hand for each of the following lead times. When required, round your answers to the nearest whole number.
Question #3
Suppose that the R&B Beverage Company has a soft drink product that shows a constant annual demand rate of 3250 cases. A case of the soft drink costs R&B $4. Ordering costs are $24 per order and holding costs are 21% of the value of the inventory. R&B has 250 working days per year, and the lead time is 5 days. Identify the following aspects of the inventory policy:
Economic order quantity. If required, round your answer to two decimal places.
Q* =
Reorder point.
r =
Cycle time. If required, round your answer to two decimal places.
T = days
Total annual cost. If required, round your answer to two decimal places.
TC = $