Question
Bruno Fruscalzo decided to start a small production facility in Sydney to sell gelato to the local restaurants. His local milk supplier charges $0.50 per
Bruno Fruscalzo decided to start a small production facility in Sydney to sell gelato to the local restaurants. His local milk supplier charges $0.50 per kilogram of milk plus a $20 delivery fee (the $20 fee is independent of the amount ordered). Brunos holding cost is $0.03 per kilogram per month. He needs 9000 kilograms of milk per month.
If Bruno's storage vessel can hold only 6,000 kilograms of milk, what would be Bruno's annual ordering and holding costs if he orders this amount?
Brunos suppliers truck can carry 20,000 kilograms of milk. The supplier does not want to deliver to more than three customers with each truck. Thus, the supplier requires a minimum order quantity of 6,500 kilograms. If Bruno orders the minimum amount, what would be the sum of his annual ordering and holding costs? Assume he has a storage vessel large enough to hold 6,500 kilograms.
Brunos supplier offers a 5 percent discount when a customer orders a full truck, which is 20,000 kilograms. Assume Bruno can store that quantity and the product will not spoil. If Bruno orders a full truck, what would be the annual inventory holding and ordering cost incurred per kilogram of milk?
Note: Round your answer to 3 decimal places.
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