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A small manufacturer of glass bottles is concerned about energy security. The company requires 10 barrels of oil per day to fuel its main furnace.
A small manufacturer of glass bottles is concerned about energy security. The company requires 10 barrels of oil per day to fuel its main furnace. For the last years, the company simply has sourced these 10 barrels per day from a single supplier. However, due to global developments, the company anticipates that in 60 days from today their supplier will stop delivery. Until then, it is able to provide up to 20 barrels per day. It will take the manufacturer 100 days from today to secure a purchasing agreement with another vendor and have this new vendor ready to supply the oil. In order to store the additional inventory required to prepare for the supply disruption, the company has found a storage solution for oil which allows for unlimited oil storage at a price of $0.20 per barrel per day
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