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 The Petroco Company uses a highly toxic chemical in one of its manufacturing processes. It must have the

product delivered by special cargo trucks designed for safe shipment of chemicals. As such, ordering (and delivery) costs are relatively high, at $2,600 per order. The chemical product is packaged in 1-gallon plastic containers. The cost of holding the chemical in storage is $50 per gallon per year. The annual demand for the chemical, which is constant over time, is 2,000 gallons per year. The lead time from time of order placement until receipt is 10 days. The company operates 310 working days per year. Compute the optimal order quantity, the total minimum inventory cost, the average inventory and the reorder point. The demand per day, carrying and ordering cost and the number of orders.

Top Answer

Given data :- Annual demand for the chemical(A) = 2000... View the full answer


sot ; -
2 AO
2 X200 0 X 2600
EOQ = 457
Min" costs = No. of order required/ Average Juventory, Average
to be placed
= 260 0 x 2000 -
7+ 50x
= $ ( 260...

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