An oil refinery buys crude oil on a long-term supply contract for $22.50 per barrel. When shipments of crude oil are made to the refinery, they arrive at the rate of 10,000 barrels per day.

The refinery uses the oil at a rate of 5,000 barrels per day and plans to purchase 500,000 barrels of crude oil next year.

If the carrying cost is 25percent of acquisition cost per unit per year and the ordering cost is $7,500 per order:

a. What is the EOQ for the crude oil?

b. What is the TSC at EOQ?

c. How many days of production are supported by each order of crude oil?

d. How much storage capacity is needed for the crude oil?